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Frederick L* Demiflg
Mo nthlyReyiew
OF
AGRICULTURE,
INDUSTRY,
TRADE
AND
FINANCE
JULY 1, 1945
Survey of Current Conditions
In the few weeks that have elapsed since the end
of the war in Europe no drastic changes have
occurred in the economic life of the nation. While
cutbacks have resulted in shutdowns or severe cur
tailment of operations in a few major war plants,
the workers laid off have readily found job oppor
tunities elsewhere or have been content to withdraw
from the labor market. In this district, at least,
the applications for unemployment compensation
have continued at a minimum level.
Speculation as to the course of economic activity
over the next few months largely centers around
statements by responsible Government officials
about requirements for the war with Japan, and
Government orders authorizing resumption or ex
pansion of civilian production. It takes some time
for the full effects of cutbacks and revisions of
military procurement programs to be felt through
out the industrial structure. This is likewise true
of the abrogation of controls over civilian pro
duction.
IN D U S T R Y
As was expected, cutbacks in war contracts have
been announced with greater frequency since May
8, but in general the volume of cutbacks to date has
not reached substantial proportions. According to
the statement of Mr. J. A. Krug, W.P.B. Chairman,
on May 28, further cutbacks as the year goes on
may be expected to reduce the rate of munitions
output by December, 1945 to about 20 per cent
under that at the time war ended in Europe. This
operating rate is based on present procurement
schedules which, of course, are subject to change
in the light of Pacific war developments.
The effect of prospective cutbacks upon the econ
omy of a particular region has become, if anything,
more obscure on the basis of experience to date.
For example, cancellation of some aircraft contracts
has led to a considerably greater reduction of sub
contracts in the district, and the complete abandon
ment of two district plants, one of which was firmly
established before the war. While it was expected
that contract cancellation would result in substan
tial reduction of aircraft work in the region, the
rapidity and magnitude of the decline came as a
surprise.
This experience serves to focus attention upon
the fact that a particular region or area with sub
stantial manufacturing facilities that are branches
of concerns operating on a national scale may be
much more adversely affected by contract cancella
tions than its pro rata share of production would
indicate. In this district, the three large manufac
turing centers, St. Louis, Evansville and Louisville,
are particularly vulnerable to shocks of this type.
Manufacturing — The immediate effects of the
end of the war in Europe are not yet fully reflected
in production indicators. This is partly due to the
inevitable lag involved in reporting and publication
of the statistical data used for analyses of economic
developments. During May, consumption of in
dustrial electric power in the major cities of the
district was up slightly from April and was sharply
higher than in May, 1944. Most of the increase
was due to increased activity at St. Louis. Trans
portation volume is rising seasonally, as is construc
tion activity.
During the wartime period there has been a tend
ency to reduce seasonal fluctuations in manufactur( Continued on Page 9)
Some Factors In the Construction Outlook
Achievement of a high national income in the
postwar period will depend to an important extent
upon high construction activity. Normally about 10
to 12 per cent of gross national product is accounted
for by direct construction activity. In addition, sub
stantial income is derived from industries which
feed supplies to the construction industry.
The importance of construction in the postwar
outlook is brought out in the recently published
“ National Budgets For Full Employment” issued
by the National Planning Association. This study
indicates that by 1950, say, a fully employed labor
force would produce $170 billion (at 1941 prices) in
gross national product. At this full employment
level some $16 to $19 billion would be spent on
construction to employ about 3.4 million workers.
Under varying assumptions, Government would
spend from $2.5 to $7.0 billion on construction,
while private expenditures under the same condi
tions might run $12 to $15.5 billion depending on
the level of the Government program.
These figures on gross national product and con
struction volume for 1950 do not represent fore
casts. They merely attempt to translate into dollar
terms the production that would result if the avail
able labor force were fully employed. Lower in
come and construction would mean unemployment
unless the structure of production or prices were
materially altered.
CHART I
NEW CONSTRUCTION ACTIVITY IN THE UNITED STATES, 1920-1944
At 1940 Price*
Since the volume of postwar construction looms
so large in the national income picture, it is desir
able to explore, from both a national and regional
viewpoint, the outlook for construction so as to
determine the possibilities of reaching the level
which is regarded as necessary for full employment.
This exploration involves consideration of the
characteristics of the construction industry, analysis
of the demand and supply factors, and considera
tion of actual forecasts of postwar construction.
C H A R A C T E R IS T IC S O F T H E IN D U S T R Y
The construction industry embraces the loosely
organized group of builders, general contractors,
special trade contractors, architects, building trades
workers, suppliers, and other elements engaged in
construction. In addition to lack of centralized
organization, its major characteristics are general
instability in activity (as shown in Chart I), pro
nounced seasonality, and resistance to change.
Total value of contract construction1 in 1939 was
$4.5 billion. It was produced by 215,000 separate
establishments, each of which did work amounting
to at least $500 in value in that year. The average
establishment had one active proprietor and four or
five employees, but there were large differences
among types of contractors.
Generally speaking the industry has felt that it
was necessary to establish and hold a price struc
ture high enough to make its active periods pay for
time lost in inactive periods. This policy has been
accompanied inevitably by consistent effort to main
tain the status quo, and to keep outsiders from
entering the field in good times.
The maintenance of a high price and high cost
structure in the residential construction industry is
the result primarily of lack of advance in labor pro
ductivity. In most durable goods lines sharp gains
in productivity, improved methods of management,
and increased application of capital have led to lower
unit costs and at the same time higher wages and
larger profits. In the construction industry in the
last 25 years, higher wages and larger profits have
not stemmed as much from increased productivity
as from rising prices.
Technological advances in equipment and utiliza
tion of labor have been greater in non-residential
1920
1924
1928
1932
1936
1940
SOURCE* Monthly Labor Review, February, 1945;
D ept o f Commerce Industry Report (Construction), Jan. 1945
Page 2
1944
1Contract construction covers work done for others or for contractors
themselves for speculative or investment purposes. Force account work
includes construction done for their own account by institutions, Gov
ernment agencies, home owners, public utilities, industry, agriculture,
real estate operators, and property managers. A considerable share of
force account work is maintenance and repairs.
than in residential construction. The reluctance to
adopt new methods in the residential building seg
ment of the industry and the relatively slow rate of
increase in labor productivity reflect partly the in
ternal characteristics of a long established activity.
These characteristics have been reinforced by the
deliberate action of the industry itself and by the
tacit approval of the financing agencies. The prev
alence of small scale enterprise, lack of central or
ganization, and the policies of the building trades
unions have made it relatively easy for the in
dustry to resist and retard changes that might have
lowered costs on new construction.
S U P P L Y O F L A B O R A N D M A T E R IA L S
Wartime restrictions on building, necessitated by
the short supplies of labor and materials, resulted
in a decline in the physical volume of new construc
tion in 1944 to about the very low level of 1933.
The situation with regard to labor and some mater
ials is easing, however, and Government restrictions
have been modified appreciably since the end of the
war in Europe.
Although some building materials, particularly
lumber, are in very short supply and promise to
continue so for the next few months, they may be
expected to become easier as war demand slackens.
By the time large scale reconversion occurs, sup
plies of materials should be adequate to support a
substantial building program.
Within one year after the end of the Japanese
war, the construction industry is expected to reach
an annual capacity in men, materials and machinery
to support $11 billion of building, and be capable
of further expansion almost at will.2 Thus, aside
from the very immediate future, physical supplies
should not prove a barrier to a large volume of
building.
P O T E N T IA L D E M A N D F O R N E W
C O N S T R U C T IO N
A number of factors point to a large potential
demand for construction after the war. Major among
these are: 1. All construction, but particularly resi
dential construction, was badly depressed during the
1930’s. 2. In the war years, labor and materials
scarcities restricted construction (except for essen
tial industrial and military facilities) to a minimum
consonant with the necessities of the war effort. 3.
Much of the wartime construction will not be usable
under peacetime conditions. 4. Both businesses and
individuals have accumulated a large amount of
liquid savings during the war period. 5. Public
2Postwar Capacity and Characteristics of the Construction Industry,
Bulletin 779, Bureau of Labor Statistics.
opinion appears favorable to a w'ell-conceived public
works program.
Within the Eighth District proper there exists a
large need for both residential and non-residential
building. The 1940 Census of Housing listed 2.8
million dwelling units in this district. More than
850,000 or some 29 per cent needed major repairs
in 1940, and probably this number has increased
during the war years.
In the six major metropolitan areas of the dis
trict, the proportion of dwelling units needing major
repairs ranged from 9 per cent in St. Louis to 22
per cent in Little Rock. More than half of the
dwelling units in Memphis had no inside bath, and
in St. Louis, which showed up better than any of
the other areas in this respect, almost one-third of
the units had no inside bath.
Almost one-fourth of all dwelling units in the
six metropolitan areas combined were built prior to
1900. Almost one-half of these were fifty years or
more and one-fourth were at least sixty years old in
1940. The Bureau of Internal Revenue estimates
that the average useful life of a dwelling unit is
sixty years. This means that in 1940 about 170,000
dwellings in the Eighth District were past the
average useful life span and probably should have
been replaced. In the past five years perhaps an
other 100,000 units have been added to this group.
These conditions indicate a tremendous potential
demand for replacement and repair. In addition
there will be strong demand for new housing. War
developments shifted a considerable body of people
from rural areas to urban centers. A better balance
in the district economy would be achieved if through
expansion of peacetime industry these population
increases in the urban centers could be held there,
and even increased further as the cities absorb the
overflow of population from the rural regions.
In 1940, the vacancy rate in the entire district
was 9 per cent. In the six metropolitan areas it
averaged only 5 per cent, which is considered “ nor
mal”, varying from 1.9 per cent in Evansville to 5.9
per cent in St. Louis. By 1944, despite considerable
war housing developments, the vacancy rate had
shrunk to 0.4 per cent in Louisville, 0.8 per cent in
Evansville, 0.9 per cent in St. Louis, and 1.2 per
cent in Little Rock. In 1940, about one-tenth of
the metropolitan area dwellings had more than 1.5
persons living per room, a condition regarded gen
erally as undesirable. This situation has been ag
gravated during the war years. Both shrinking
vacancy rates and over-crowding in dwellings have
occurred in urban centers despite large withdrawals
Page 3
for the armed services. The return of servicemen,
new marriages, and a probable increased birth rate,
will accentuate these conditions unless there is a
large volume of new housing construction.
dential building year since 1928, some 715,000 units
were erected and in 1944, when construction was
at a minimum under wartime restrictions, 160,000
units were built.
Demand for non-residential construction is also
high. Surveys conducted in various cities of the
district indicate that industry is expecting to em
bark on a sizeable construction program in the im
mediate postwar period. In St. Louis, for example,
a current survey points to expenditures of $40 or
$50 million for new industrial construction for es
tablished plants, and almost as much for buildings
for incoming concerns. Other city surveys also
indicate sizeable postwar industrial construction.3
This forecast is in fairly close agreement with
those by private sources. The F. W . Dodge Cor
poration has estimated a $9.6 billion average volume
of new construction for ten postwar years. This
would involve building 820,000 nonfarm dwelling
units per year. Engineering News-Record forecasts
a postwar construction peak of $12.4 to $18.7 billion.
This figure presumably includes expenditures for
maintenance and repairs. The American Builder
expects 750,000 new dwelling units to be constructed
in the third postwar year.
F O R E C A S T S O F P O S T W A R C O N S T R U C T IO N
A number of forecasts by private and public
agencies indicate high dollar volume of construction
after the war. The recent estimate published by
the Department of Labor places new construction
expenditures at an annual average of $10.9 billion,
with an additional $4.4 billion for maintenance and
minor repairs, in the first five postwar years. Ex
penditures for new construction are expected to be
$4.7 billion in the year prior to the defeat of Japan
and to rise to $7.8 billion in the first full peacetime
year. From then on they would rise to $12.1 billion
in the fifth peacetime year, presumably 1950 or 1951.
Private construction is expected to average $7.9
billion and public construction $3.0 billion in the
five-year period.4 These dollar estimates are ex
pressed in terms of 1940 prices.
In terms of dwelling units, the forecast would
mean an average of about 900,000 nonfarm units in
the five postwar years. Of these, 850,000 would be
privately financed and 50,000 publicly financed. The
average cost of a privately-financed dwelling unit
(excluding land cost) is placed at $3,750 and that of
a publicly-financed unit at $3,200.
The peak year in construction of nonfarm dwell
ing units was 1925 when 937,000 were built. During
the Thirties the largest number built in any one
year was 515,000 in 1939. In 1941, the biggest resi3Industrial construction in this district has been exceptionally high dur
ing the war years and because of this situation it might be expected
that demand in the immediate postwar period would be slack. Actually,
however, dollar figures on wartime building are illusory on several
counts. They are inflated far beyond normal replacement cost, they
include many structures not particularly usable except for war output,
and in scJme cases they include plants well located under wartime
standards but badly located for profitable peacetime production.
In
this district total large industrial facility awards, both private and public,
placed from June, 1940 through October, 1944 were valued at $1.5
billion. Less than half of this amount, $700. million, was for structure,
the balance for equipment. Only $46 million was for privately financed
structure, and, generally speaking, it is the publicly financed plant that
will have to be written off after the war. About 70 per cent of total
structure (in dollars) was designed for ordnance production and much
of the remainder was for very specialized war work.
4A. C. Findlay, “ Probable Volume of Postwar Construction’ *, Monthly
Labor Review, February-April, 1945.
Page 4
CHART II
CONSTRUCTION CONTRACT AW ARDS EIGHTH FEDERAL RESERVE DISTRICT
Millions of
Dollars
1927 to 1944
MilKonsof
Dollars
SOURCE: F. W. Dodge Corporation
Chart II shows the volume of construction con
tract awards in the Eighth District from 1927
through 1944.6 On the basis of the average relation
ship of district contract awards to national con
struction volume, an $11 billion annual average ex
penditure for country-wide construction would lead
to an average annual volume of contract awards of
about $400 million in this district in the first five
postwar years. About $140 million would be resi
dential construction involving perhaps 35,000 to
40,000 new dwelling units per year.
As the chart shows, the district had a larger
volume than this in the late Twenties and in 1941
and 1942. Total awards in 1942 were almost double
aThe F. W . Dodge figures used differ from actual work performed in
that they represent awards and hence work started in a particular year
regardless of completion date. They also do not cover any farm con
struction and exclude small projects. A notable example of the effect
of these differences is the high volume shown for 1939, which reflects
a construction contract award for more than $100 million, or almost
one-third of the year's total, in December of that year. W ork done on
this project carried over several years.
this amount. Because of W ar Department policy
early in the war of putting munitions plants inland
the wartime facility awards in the district ran above
what might have been expected on the basis of pre
vious industrialization. The Government ordnance
plants, which were important in this district, cost
considerably more than the average industrial es
tablishment.
C O N S T R U C T IO N COSTS A N D E F F E C T I V E
DEM AND
Despite the apparent large potential demand and
the generally rosy forecasts for heavy construction
activity after the war, the situation is not without
some question marks. W hether or not the large
potential demand that exists for construction will
becom e effective in the early postwar years prob
ably will depend in large measure upon the level of
construction costs. This applies in both the resi
dential and nonresidential construction fields. In
the residential field a prospective builder or pur
chaser measures the cost of a new house against
the cost or rental price of existing properties. The
standard of shelter acceptable is surprisingly flex
ible particularly in respect to lower-priced units.
A t the present time construction costs are higher
than in the boom period of the 1920's. Prices of
building materials are currently about 15 per cent
above 1926 and wage rates have shown a rise of
about 30 per cent. Labor costs have increased about
as much as wage rates. Studies indicate that on-site
work performed per man-hour has declined sharply
during the war years.
W hile there are reports that the building industry
is experimenting* with methods designed to lower
costs, especially through broader application of pre
fabrication, past performance would suggest some
skepticism. There is already considerable prefabri
cation of items going into construction jobs and the
war has accentuated the trend toward more off-site
work. Despite this, total construction costs have
continued to show rising tendencies.
If the building industry is going to absorb a sig
nificant number of the persons displaced by the
decline in manufacturing employment and provide
jobs for returning servicemen who may seek to
enter the industry, cost reductions must be fairly
general throughout the industry. A s far as labor is
concerned this means either more output per worker
at current wage rates or lower rates for the same
amount of output. In achieving increased produc
tivity, emphasis should be placed in so far as pos
sible upon annual take-home pay through a more
stable level of building activity, including further
progress toward eliminating the marked seasonal
variations which characterize the industry.
O U T L O O K F O R P U B L IC C O N S T R U C T IO N
In some quarters considerable store is being laid
on a prompt expansion of public construction to
cushion the effects of unemployment due to curtail
ment in manufacturing activity in the immediate
postwar period and to compensate for whatever lag
may develop in private construction. Historically
the public works programs of states and municipal
ities have tended to expand in periods of prosperity
and contract in periods of depression, thus intensi
fying the cyclical swings in private construction. By
better planning this situation may be improved in
the future.
Unfortunately it is not a simple matter to time
public construction programs so as to attain im
portant stabilizing effects. Public construction pro
grams generally require public authorization of
appropriations or bond issues and unless there is
sufficient discretion given to administrative authori
ties to permit long range planning it is difficult to
obtain prompt action that will assure proper timing
of the actual construction work in light of the needs
of the general economic situation.
A t present it appears doubtful that much reliance
can be placed on public construction to bridge the
period of conversion from war to full peacetime
activity. Projects under discussion involve expendi
tures of billions of dollars. M ost of these projects
are only in the discussion stage and many of them
also are long range projects which would, even if
begun promptly, provide relatively little employ
ment to cushion the shock of the transition period.
W ithin the Eighth Federal Reserve District the
situation with regard to public construction is not
very different from the national picture. In St. Louis,
for example, a $64 million bond issue has already
been voted for postwar construction. A ccording to
estimates, projects developed from this bond issue
would employ 12,000 men for one year.
If the problem of providing employment in the
transition period falls primarily upon private con
struction, it behooves the industry to watch costs
carefully so as not to resrict demand. Perhaps in
the first flush of unrestricted construction there may
be sufficient demand regardless of cost to provide
substantial activity. Sharply rising prices, however,
might dampen this demand very quickly. All in all
some healthy skepticism regarding the absorption
of workers by the construction industry in the
transition period would not be amiss.
Frederick L. Deming
Page 5
Farm Credit Programs That Get Results
Recently the writer had the opportunity to spend
three days in two country banks that have de
veloped outstanding programs of service to farm
communities.
In these days when many country bankers are
experiencing a decline in farm loan volume, it was
interesting and refreshing to observe the operations
of these country banks which have adopted pro
gressive farm service programs. They not only
have been able to maintain their volume of farm
loans but have actually shown a steady increase
during recent months. Other country bankers may
be interested in some of the activities that have re
sulted in improved working relationships between
these bankers and their farm customers.
The first bank visited had inaugurated its new
farm service program in the fall of 1944. The presi
dent of the bank had become alarmed at the con
stantly declining loan volume, and the problem had
become a major topic of discussion at board meet
ings. Various ideas were advanced from time to
time as to what might be done to reverse the trend,
but by mid-summer of 1944 loan volume had de
clined to a level that dictated immediate action.
The board decided that the problem was one of
merchandising bank services. The bank did not
have on its staff a man with proper background or
sufficient time to take bank services into the country.
Therefore, a man with farm background and wide
experience working with farmers was employed as
farm representative for the bank. About thirty days
prior to the time the farm man came to the bank,
an attractive illustrated circular was prepared that
strikingly told the story of bank services available
to farm people, using the question and answer
method. This circular was given boxholder distri
bution in the area served by the bank.
the end of five months’ operation under the new
program, loans made to borrowers who had never
before been customers of the bank totalled over
$170,000, or almost twice the goal originally estab
lished for the first twelve months. The result was
that this bank service program, which the officers
had calculated to be a non-profit operation for the
first year, in five months was not only paying its
way but also showing a nice margin above the
added cost of the new service.
The farm man employed by the bank does not
make final credit decisions. His entire time is spent
outside the bank contacting farmers, explaining
bank services, and working in close cooperation
with the county extension agent, the soil conserva
tion service, and other agricultural agencies. The
amazing flow of new farm loans to the bank is a
tribute to the good will being created in the com
munity by the activity of this farm representative
working outside the bank. Credit decisions are
made by the president of the bank up to a certain
dollar limit laid down by the board. The board,
however, is so located that the members are on call
at any time to review loan applications for amounts
in excess of the president’s limitation. This bank
has discarded the old slide-rule basis of credit ex
tension and has assumed an attitude of seeking
reasons for making a loan rather than attempting
to find faults to justify a rejection. Each applica
tion is considered on its individual merit, and the
amount of credit extended is determined by the
capacity of the individual farm unit to repay. All
loans are made at a flat rate of five per cent. Re
payment plans are timed to coincide with probable
marketing dates of the farmer’s various production
programs.
P R O M P T L Y PASS N E W L O A N G O A L
Loan rejections are handled carefully. The officer
outlines for the applicant the reasons why his re
quest cannot be granted. An attempt is made to
show the applicant how he might adjust his affairs
to qualify. If there are other local lenders who
handle the type of loan requested, this bank official
aids the applicant to contact the proper lender. This
bank is considering credit from the farmer’s view
point, and adapting its services to the peculiar needs
of the individual.
The bank has endeavored to prevent its farm pro
gram from creating what might be regarded as un
fair competition by other banks in the community.
Before the program was started the president met
At the meeting of the board when the farm pro
gram was adopted, $100,000 of new farm loans was
established as the goal for the first year of opera
tion under the new plan, The immediate response
to the program amazed the officials of the bank.
The public reaction to the first publicity was that
of pleasant surprise to learn that this country bank
was anxious to provide funds to meet the reason
able credit requirements of the community. Many
farmers apparently had come to believe that banks
did not want to make farm loans. This reaction
was verified by the flow of new credit requests to
the bank following the circular announcement. At
Page 6
C R E D IT F R O M F A R M E R V I E W P O I N T
with representatives of other banks in the county
and attempted to organize them as a group to take
a keener interest in improving services to farmers.
The bank’s farm program was adopted only after
the efforts for joint action were unsuccessful. A
policy is followed, however, of not soliciting the
refinancing of loans currently outstanding with
other banks in the county. The new program of
this bank, therefore, has not affected its good work
ing relationship with other banks in the area. A
considerable amount of the new volume of credit is
originating from new borrowers, or from farmers
who for the past several years have financed their
operations through Government credit agencies.
These farmers express their preference for bank
credit service when their applications are considered
from the farmer’s viewpoint and the credit accom
modations keyed to the needs of the individual
operation.
That is the story of a new farm program, a pro
gram that even in its infancy is proving profitable
and one that is laying a groundwork of good will
that will pay greater dividends for years to come.
ST A R T E D S E R V IC E Y E A R S A G O
The other country bank visited has had an aggres
sive community service program for many years.
Upon entering the bank one is impressed with the
pleasant atmosphere which prevails and the con
venient arrangements which the bank has planned
for maximum customer comfort.
The president and his farm representative out
lined to the author their many interests in the agri
culture of the area they serve, and the numerous
programs which they are actively sponsoring to pro
mote better farming. The farm representative was
formerly county agent of the county in which the
bank is located, and with his excellent background
in agriculture and his ability to work with the farm
people he has proven a great asset to the bank.
This bank not only works with the farmers of the
county, but for years has given financial support to
constructive agricultural programs. The bank first
sponsored a pasture improvement program, which
was worked out with the cooperation of the county
agricultural organizations, and the county exten
sion agent. In encouraging the adoption of better
pasture programs the bank helped organize meet
ings and prepared special notices urging farm people
to attend. When all-day meetings were held the
bank furnished meals for those in attendance. The
pasture improvement program has contributed ma
terially to better farming in the community, and it
has led to many sound loan opportunities that other
wise would not have been available.
The bank has also sponsored the organization of
livestock breeder associations over a rather wide
area. Both the president of the bank and the farm
representative feel that in this way they have en
couraged the improvement of all breeds of live
stock common to the area. A Shorthorn Breeders
Association is already well under way. This will
be followed with other breeds of cattle, hogs and
sheep. Groundwork is now being laid for a Hamp
shire Sheep Breeders Association. The idea is to
organize breeders throughout the area and hold
annual sales of breeding stock at the bank’s home
town. It is hoped that this will result in a distribu
tion of good breeding stock at reasonable prices to
all farmers in the community.
Some time ago an effort was made to organize a
soil conservation district in the county. The asso
ciation was voted down. The bank has assumed
responsibility for doing demonstrational work which
they hope will eventually lead to a soil conservation
district in the county. Using the pasture program
as a basis they have worked out with many farm
customers excellent demonstrations that encourage
complete soil conservation practices. A number of
farms were visited that at the bank’s suggestion
have adopted improved methods and have developed
some very fine pastures and conservation programs.
This bank’s constructive efforts to improve agri
culture have brought recognition from farmers
many miles outside its normal trade territory. Many
of these farmers because of the bank’s efforts to
promote better farming have transferred their ac
counts to the bank and are transacting business by
mail in preference to dealing with local institutions
that have shown little interest in the welfare of
local agriculture.
The farm agent spends most of his time outside
the bank. He does not directly solicit loan busi
ness, but through these field contacts and services
rendered farmers, he has been very effective in
bringing new business to the bank. It was interest
ing to observe that many farmers who are not
customers of the bank regularly call to see the farm
representative for information normally supplied by
various agricultural agencies. The farm represen
tative does not make credit decisions except on
special occasions such as sales where immediate
decisions are required. The president, however, has
three men besides himself who are fully trained and
have the authority to make credit commitments.
This means that when a farmer calls at the bank
someone is always available to give immediate con
sideration to a request for credit.
The president of this bank believes that the failure
Page 7
of many country banks to serve the credit needs of
their communities is due to inability or unwilling
ness to consider credit from the farmer’s viewpoint.
As an integral part of judging credit from the farm
er’s standpoint the bank supplies extra services that
are highly appreciated by farm people. It has
found that many farm loans formerly considered
unsound for banks can be soundly handled by pro
viding a little managerial supervision in those in
stances where the farmer may be weak in manage
ment. In the past it has handled a good many
accounts for this type of farmer with excellent
success.
The services of a well-trained farm representative
give much needed help to this type of borrower.
However, before making a loan to a farmer who is
weak in management the loan officer spends con
siderable time in discussing the individual needs of
the applicant and making it clear that if the bank
goes into a credit program with him it expects to
exercise a certain amount of supervision which will
not only strengthen the bank’s position but will help
build a more profitable unit for the borrower with
the view of ultimately enabling him to become free
of debt. The bank maintains a reasonable interest
rate, but has not placed particular emphasis on rates
as a means of attracting new business.
The farm representative also offers various other
services to the farm community. In addition to
working closely with the farm organizations in the
area he has a rather complete consultation service
for farmers, which is widely used. He gives help
to farmers, in his office or on the farm, on feeding,
breeding, crop production, and other problems. He
helps develop better farm operating programs, at
tends shows and sales, gives assistance to farmers
in the selection of breeding stock, and is called on
for a wide variety of other informational services.
L A N D U SE M A P A N A S S E T
An example of an extra community service pro
vided by the bank is a specially prepared map of
the county. This is a land use map superimposed
on a farm ownership map of the county. In addi
tion to farmers, these maps were distributed to
practically every business office in the county, and
a copy was presented to all schools along with an
explanation of how it might be put to practical use
within the school system. The map is very useful
to the bank officers in connection with farms in
which they are interested; they refer to it for im
mediate information about the soil resources and the
type of farming most likely to be successful. The
broad interest shown in the map has repaid many
times its cost of preparation.
The farm representative is not the only one on
the staff of this bank who invades the country. On
the last afternoon of the visit, which was spent in
the country with the farm representative, the presi
dent of the bank and one of the junior officers were
also in the field and returned late in the evening
with two new farm real estate loans totaling $21,800.
This bank isn’t worried about a declining volume
of sound farm loans.
Darryl R. Francis
A O R IC m m R E
(In thousands
o ! dollars)
SRIC23S
CASH F A RM IN C O M E
April
Cumulative for 4,months
1945
1944
1945
'1 9 4 4
1943'
A r k a n s a s ..,.----- .$ 12,653$16,100
$
75,533
I l l i n o i s ..... . . . . . .
I n d i a n a ..... .----K e n tu ck y .,..........
Mississippi----- . . .
Missouri........ .
Tennessee..............
88,816
49,733
15,904
12,166
45,354
18,214
91,077
53,245
16,013
33,182
48,948
17,645
353,635
190,322
194,638
80,508
189,137
11)2,587
Totals................
242,840
256,210
1,186,360
$ 66,833
$ 67,387
391,220
147,0.98
57,789
202,983
98,937
341,065
191,145
116,133
52,115
170,485
S2,844
1,177,112
l7021J74
2)2,252
W H6fci|$ALE PRICES IN TH E UNITED STATES
Bitreau of Labor
May.,
Apr.,
Statistics ;
M ay/45 comp, with
May,
(1926=100)
1945
1945
; 944
Apr.,’45
May,’44
All Commodities •. 106;0;
Farm^roducts. . 129.9
.. 107,0
O ther,. . . . . .
. 99.4
Bureau o f Labor
Statistics
<193 5-39 ==*100)
Cattle and Calves.......... 126,479 115,475 105,384
H o g s ................... ......1 6 7 ,8 4 2 149,411 349,735
Horses and M u le s ....... 3,089
3,806
1,914
S h e e p ..-----------------168,517 33,107 77,745
Totals . ...... ................ 465,927 301,799 534,778
Page 8
86,437
53,174
3,069
101,919
69,025
48,767
3,828
11,395
53,73?
49,1.25
1,907
29,656
244,599 133,015 134,427
104.0
122.9
:1G5.0
98,5
-fO.3%
- f 0.7
+ 1.1
-4- 0.1
4+
-f
+
1.9%
5.7
L9
0,9
COST OF L IV IN G
May 15, Apr. 15, Sept. 15,
May 15,’45 comp, with
1945
1945
1942
Apr. 15/45
Sept. 15/42
United States. . . . ,
St. Louis . . — . .
RECEIPTS AND SHIPMENTS AT NATIONAL STOCK YARDS
Receipts
•Shipments
May,
Apr.,
May,
May,
Apr.,
May,
1945
1945
1944
1945
1945
1944
105.7
129.0
105.8
99.3
128.0
126.3
*
127.1
125.2
117.8
116.6
119.3
4- 0.7%
+ 0.9
+
4"
8.7%
8.3
* Not available.
Bureau of Labor
Statistic!)
(1935-39-5=100)
May 15,
1945
U. S. (51 cities). . .
Little R o c k ,. , . .
Louisville., ,
,
138.8
141.7
138.0
131.9
146.9
COST OF F O O D
Apr. 15,. Sept. 15,
1242
194.5
136.6
139.0
137.6
130.6
145.2
126.6
126.7
129.2
124.2
129.7
May 15/45 comp, with
Apr. 15/45
Sept. 15/42
+
4+
+
4-
1-6%
1.9
0.3
L0
1.2
- f 9.6%
4-11.8
4 - 6.8
4- 6.2
4-13.3
CURRENT CONDITIONS
(Continued from Page 1)
ing activity, but certain industries still show marked
seasonal movements. Meat packing activity in the
district in May was considerably below the level of
January and February, 1945 and, because of small
marketings of meat animals, was well below a year
earlier. Lumber output at district mills is expand
ing somewhat, although it is still not sufficient to
meet demand and is off considerably from the peak
levels of 1941 and 1942.
Among important district industries which now
exhibit little seasonal variation, May output of shoes,
chemicals, electrical machinery, steel and industrial
alcohol was not much changed from April. As com
pared with a year ago, production of electrical ma
chinery and industrial alcohol was higher in May,
1945.
During May the operating rate of steel ingot pro
ducing furnaces dropped somewhat from the April
level, but actual production of finished steel re
mained fairly stable. The reduced operating rate
reflected primarily the accumulation of a surplus of
ingots and slabs, since rolling capacity in this dis
trict is not sufficient to keep up with ingot produc
tion at a high operating level. Steel orders at dis
trict mills and foundries are still backlogged several
months into the future.
A third monthly holiday on whiskey production
has been authorized for July. The War Food Ad
ministration has prohibited sales of corn for whiskey
production, and output at Kentucky distilleries may
be further reduced because most rural distilleries
depend upon natural water supply to cool the mash
and in mid-summer water is usually low and warm.
Mining and O il— May output of oil at district
fields was up appreciably from April with the daily
average rate of production increase amounting to
about 3,000 barrels. May production, however, was
well below the level of a year earlier. Exploratory
activity in the district continues to run below 1944.
During the first six months of this year 1,020 new
wells were drilled in this district in contrast to 1,182
in the comparable period of 1944. Most of the de
cline resulted from reduced drilling activity in Ken
tucky.
Coal production at district mines in May was 10
per cent above April and unchanged from May, 1944.
Nonferrous metal mining activity holds fairly steady
at a point well below wartime peak. Supplies of
most nonferrous metals have been built up consider
ably in the past year.
Employment— In May total employment in the
Eighth District was somewhat higher than in April.
Major war plant employment in the district, how
ever, has dropped appreciably since the beginning
of the year with most of the decline occurring in
shipbuilding activity. The decline in such employ
ment from January, 1945 levels has affected pri
marily Evansville and Louisville. In St. Louis em
ployment in major war plants in May was higher
than in January. War plant employment through
out the district is far below the peak level reached
about eighteen months ago.
D E B IT S T O IN D IV ID U A L A C C O U N T S
m A i - PR O D U C TIO N
(Inthmmn&B
■ :& & &
.11
Apr./45
May,’44
5,710
1,747
5,037
1,232
11,726
5,912
2,151
5,314
1,673
15,050.
( I 11 thousands
of dollars)
M ay,*45 c*)mp. with
Apr.,'45
May/44;
~
+
+
+
4-
2%
— $%
2$
15
ao
io
t f :
—it
-'0 *
ON OK ELECTRIC : i ? y
Apr.,
May,
' M m .1945
1944
< corapawid witfc
. 1945
. K .W .H . Apr.,1945
;
■ W 259
10,2491
17,495
6,650
7,418
10.3,717
fillip
6,742
2,892
16,7S0
6,722
7;841
91,925
132,902
■;4 i m -.
.+
.
+
a
+
3
.W ll ■
— 16
:+
3
+
16
+
14
■
•{•Revised,
. -a
IkMCWP! ttr\x> <*e t>iXXJUXvV/A4/kI
" " " W : ’ &£♦'L d t r i s
f irst nitie days
Jane,*44
5 3ftos»’45 '5 mt«.*44 .
48,062
JS&fcion of St. Louis. > f
May,
1945
£ l Boradd, Ark.......... $ 10,037
Port Smith, A rk.. . . . .
22,983
Helena, A r k .............
4,242
Little Rock* Ark........
90,420
Pine Bluff, A r k ... , , .
15,001
Texarkan^ Ark.*Tex. .
11,855
Alton, 111. . . . ............ .
14,812
E .St.L.-N at.S.Y.,IlI..
68,059
18,400
Quincy, III.................
Evansville, Ind..........
104,129
Louisville, K y ........... . 373,520
16,872
Owensboro, Ky. .
Paducah, K y .. .
9,080
Greenville, Miss.
9,060
Cape Girardeau, M o ..
5,789
Hannibal, M o ... . . .
5,163
20,277
Jefferson City, M o.. . , .
St. Louis, M o............. , 1,235,956
6,935
Sedalia, M o-----------35,276
Springfield, M o..........
9,527
Jackson, Tenn........
275,954
Memphis, Tenn.. ____
T ota ls.. . . . . . . i
, 2,363,347
May,
1944
April,
1945
$
M ay/45 comp, with
Apr.,’45 May,*44
9,250
20,375
3,749
86,294
14,815
10,950
13,988
67,568
17*306
93,346
338,104
16*962
8,022
8,343
5,245
4,826
30,743
1,028,190
6,151
29,495
8,792
251,472
$
9,034
21,841
3,629
67,769
15,082
10,008
12,460
80;,582
16,607
107,509
318,749
16*374
8,128
8,689
4,7-46
4,535
23,911
1,305,286
6»1&0
34,801
8,546
225*255
4~ ’ -S’:
4* 1
4- S
4“ 6
4- 1
4* 6
+ 12
4-10.
— 1
4-13
4- $
4-10
4- 7
— 34
4-20
4-13
4-20
4* 8
4* 19
4-11%
4- 5
+17
4^3:3
— 1
4" 18
4-19
— 16
+ 11
— 3
+ 17
+ 3
+ 12
4- 4
+22+14
— 15
— 5
+ 13
+ 1
+ 11
+23
2,075,986
2,309,701
+14
+
4 -9 %
4-13
2
Page#
TRADE
R E T A IL T R A D E
D E P A R T M E N T STORES
Net Sales
May, 1945
5 mos.’45
compared with
to same
Apr.,*45 M ay/44
teriod *44
Stocks
on Hand
May 31,*45
comp, with
May 31/44
Stock
Turnover
Jan. 1 to
May 31,
1945 1944
Ft. Smith, Ark.. + 2 4 %
+10%
+ 25%
1.80 1.83
+ 5
Little Rock, Ark. 4*15
+ 16
2.34 2.06
4 “ 12
Quincy, I I I ..... 4-10
. . .
+ 3
4 -n
— 14
. . .
♦..
Evansville, Ind.. — 5
+ 2
Louisville, K y ... + 1
+13
+ “ 4
2.74 2.26
-f 3
2.08 1.89
St. Louis* M o ... 4* 7
4-13
+ 17
+ 1
+ 21
. . .
Springfield, M o.. 4* 6
+ 11
+
1
4
+
‘
*5
2.38 2.13
Memphis, Tenn.. 4-20
+ 9
—8
2.09 1.82
*All other cities. - 0 + 10
+ 11
8th F .R . Dist.. 4 - 9
2.21 1.98
+ 13
+ 14
+ 2
*E1 Dorado, Fayettevil
uff, Ark. ; Alton, East St. Louis,
Harrisburg, Mt. Vernon, 111.; Vincennes, In d .; Danville, Hopkinsville,
Mayfield, Paducah, K y .; Cbillicothe, M o .; Jackson, Tenn.
Trading days: May, 1945— 25; April, 1945— 25; May, 1944— 26.
Outstanding orders of reporting stores at the end o f May, 1945, were
28 per cent greater than on the corresponding date a year ago.
Percentages of accounts and notes receivable outstanding May 1, 1945,
collected during May, by cities:
Instalment Excl. Instal.
Instalment Excl. Instal*
Accounts
Accounts
Accounts
Accounts
Fort S m ith ...
Little R o c k ..
Louisville.. . .
Memphis . . . .
..%
32
39
48
65%
64
63
61
Q u in cy ........ 32%
St. L o u is .... 47
Other cities.. 27
8th F.R. Dist. 43
74%
74
63
68
IN D E X E S O F D E P A R T M E N T STO R E S A LE S AMD STO C K S
8th Federal Reserve District
M ay, Apr., Mar., May,
1945
1945
1945
1944
209
209
114
113
192
188
109
106
233
235
100
98
197
197
101
100
ip a ily average 1935-39«100.
^Monthly average 1923-25^=100.
Stocks
on Hand
Net Sales
5 mos/45
to same
period '44
May 31/45
comp, with
May 31/44
Stock
Turnover
Jan. 1 to
May 31,
1945 1944
Men's Furnishings + 2 5 % — 1 7 %
+ 6 %
—
9%
1.62
1,30
Boots and Shoes
4 -2 1
+ 5
+11
— 1
4.0 4
3.45
Percentages of accounts and notes receivable outstanding May 1, 1945,
collected during M ay:
Men’s Furnishings..................6 5 %
Boots and S hoes.. ......................5 4 %
Trading days: May, 1945 — 2 5 ; April, 1945 — 2 5 ; May, 1944 — 26.
R E T A IL F U R N IT U R E STORES
Net Sales
Inventories
Ratio
of
May, 1945
May 31, 1945
Collections
compared with
compared with
A pr./45 M ay/44 Apr.30/45 May 31/44 M ay/45 M ay/44
I!
St. Louis Area*.. + 2% + 3%
37%
40%
+ 1%
St. L o u is.. . . .
39
+ 4
37
— 4
4* 1
Louisville.. . . . . . + 7
+29
30
-031
M emphis.. . . . . . . + S
26
27
+ 4
+ 4
litt le Rock.
4-io
-010
31
33
+ 7
*
*,
SpringfieM. > . . . . +22
4- 3
H u eB lu ff . . . .
35
— 27
38
«
*
Sort Sm ith.. . . . . - i
— 13
2
—
36
34
8th Dist. Totals2. + 5
+ 5
+ 2
*Nc>i shown separately due to insufficient coverage, but included in
Eighth District totals;
^Includes;St. Louis, Missouri; East St. Louis, and Alton, Illinois.
2In addition to above cities, includes stores in Blytheville, Arkansas)
Evansville, Indiana; Henderson, Hopkinsville, Owensboro, Kentucky;Columbus, Greenville, Greenwood, StarkvilJe, Mississippi; and Hannibal,
Missouri.
+
PE RC 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 S A LE S
M ay/45
A pr./45
M ay/44
Cash Sales.* .............. ....................
22%
Credit Sales. * * . . . , . . ^
. 78
^
...... f..... 100
Fagelfi
May dollar sales showed a smaller gain over the
like period in 1944 than any month to date in
1945. This situation was somewhat unexpected in
view of generally higher prices due primarily to
shortages of cheaper merchandise lines. Probable
factors which account for the small increase over
May, 1944 include: the Seventh W ar Loan, fear of
curtailed income due to prospective cutbacks, one
less trading day (most stores closed on V -E Day)
and the fact that May, 1944 sales were unusually
high.
A G R IC U L T U R E
S P E C IA L T Y STO R ES
May, 1945
compared with
Apr*/45 May,*44
Dollar sales of retail lines reporting to this bank
were generally larger than in April and in May, 1944.
The most pronounced increases from a month earlier
were at men’s furnishings, shoe and department
stores; furniture stores showed moderate gains in
the month while women's store sales were virtually
unchanged from those of April. As compared with
May, 1944, department and furniture store sales
were about the same, women’s wear store sales
were up slightly, and shoe store sales were also
higher. Dollar volume of men’s furnishings store
sales was off substantially from the comparable
period last year.
22%
78
100
20%
80
100
After a few days of favorable weather, heavy
rains began again about the middle of June, and
further delay is being experienced in an already late
crop planting season. Considerable flooding has
occurred in Arkansas and Missouri, and it appears
likely that much fertile bottom-land will not con
tribute greatly to total farm production in those
states. Many areas of the district suffered soil loss
and crop damage from heavy rains of flash flood
proportions during the mid-June period.
The season is late generally over the district but
with great variation between areas. Corn planting
in much of Missouri and southern Illinois was
probably not more than 40 per cent complete when
further delayed by the mid-June rains. In other
areas corn planting is complete with fairly good
progress, even though considerable replanting will
be required in some localities. Soybean planting
has followed a similar pattern. Some corn that is
up with good stands is suffering from lack of culti
vation due to wet ground.
The national crop and planting situation appears
to be more favorable than general conditions within
the Eighth District. Apparently this region has
received more than its share of low temperatures
and heavy rains. Nationally, progress has been
fairly satisfactory. The winter wheat crop promises
to be a record breaker and the tame hay crop close
to the all-time peak. Spring truck crops are about
one-fifth greater than average.
BANKING AND FINANCE
Banking developments in May and June were
dominated by the effects of the Seventh War Loan
drive. Over-all drive quotas will be exceeded in all
Eighth District states. Sales figures to date indicate
that quotas for total sales to individuals will also be
reached, but sales of E bonds in most states are
lagging considerably behind the quotas. During the
course of the drive banking institutions appear to
have acquired substantial amounts of securities from
nonbank investors which were acquired during pre
vious drives.
Bank loans rose somewhat during the past five
weeks, mainly reflecting borrowings to purchase
drive securities. The volume of such borrowings,
however, was not as large as in previous drives,
indicating that banks generally were complying
with the Treasury request that they assist in con
fining the purchase of drive securities to the invest
ment needs of the subscribers.
Beginning the first of June, the Treasury has re
quired banks to keep records of and to report
unusual currency transactions, particularly those
involving large denomination bills. The purpose
of this move was to obtain information that will
assist in curbing income tax evasion which is fre
quently linked with black market and other illicit
activities in which large amounts of currency are
used. Many taxable transactions which may be
covered up by the use of currency, can be checked
into only as currency flows through financial in
stitutions.
Thus far little evidence is available as to the
possible broader monetary effects of the action.
During the early part of June there seems to have
been some return of large denomination bills from
circulation. During the three weeks ending June
20 money in circulation showed an increase of only
$36 million, which is unusually low for this period.
In the comparable period of last year money in
circulation rose by $181 million.
NEW MEMBER BANKS
Since the last issue of this Review the
Newburg State Bank, Newburg, Indiana, and
the Switz City Bank, Switz City, Indiana,
have become members of the Federal Reserve
System.
WHOLESALING
Data furnished by Bureau of Census,
U. S. Dept, of Commerce*
Automotive Supplies..............................
Boots and Shoes.................. .............. ..
£)rugs and Chemicals............................
Dry Goods.............. ..............................
Electrical Supplies................................
Furniture................................................
>Groceries................................................
Stocks
Net Sales
________ Lines of Commodities_______
May, 1945
Apr.’45
May,’44
— 4%
+
9
— 5
— 2
— 4
+ 26
+ 14
+ 10
— 10
-0 +
9
— 4
+
6
Plumbing Supplies..................................
Tobacco and its Products......................
Miscellaneous..........................................
Total all lines**........................ ..............
*Preliminary.
**Includes certain lines not listed above.
May 31, 1945
compared with
May 31,19
+ 22%
. . . *■
....
— 31
+38
....
— 19
— 8
— 11
....
....
— 19
— 18
+ 21%
+ 22
+ 2
— 17
+ 19
— 9
+
7
-0— 11
+ 31
— 16
+ 16
*0-
CONSTRUCTION
B U IL D IN G P E R M IT S
New Construction
(Cost in
thousands)
Little R ock. . . . .
,
May Totals. . .
Apr. Totals. . .
Number
1945 1944
Cost
1945
1944
53
62
14
28
59
333
111
$ 252
132
161
767
238
617
S26
545
661
1,550
978
VALUE
(In thousands
of dollars)
$
Repairs, etc.
Number
Cost
1945 1944 1945 1944
84
21
99
277
239
135
187
38
243
219
111 $ 82
253
104
60
14
242
183
192
213
720
970
822
840
858
739
596
460
$ 22
57
50
78
148
355
480
C O N ST R U C T IO N C O N T R A C T S L E T
May, 1945
April, 1945
Total 8th District............ $ 57,595
Source: F. W . Dodge Corporation,
May, 1944
$ 5,194
$ 19,074
BANKING
CHANGES IN P R IN C IP A L ASSE TS A N D L IA B IL IT IE S
F E D E R A L R E SE RV E B A N K O F ST. L O U IS
Change from
June 20,
May 23, June 21,
(In thousands of dollars)
1945
1945
1944
Industrial advances under Sec. 13b.......... $ . . . . .
Other advances and rediscounts................ 22,950 — 17,830 — 14,750
U. S. securities.............................................. 832,816 — 19,515 +256,217
Total earning assets................................ 855,766 — 37,345 +241,467
Total reserves................................................ 557,674
Total deposits................................................ 621,401
F. R. notes in circulation............................ 963,253
Industrial commitments under Sec. 13b..
50.
-f- 12,131
+
7,088
+
1,986
-0-
+102,173
+103,472
+*68,413
+
2
P R IN C IP A L RESOURCE AN D L IA B IL IT Y ITE M S
OF R E PO RTIN G M EM BER BANKS
Change from
June 20,
May 23, June 21,
(In thousands of dollars)
1945
1945
1944
Total loans and investments.................... $1,943,029
+ 97,052 +387,149
Commercial, industrial, agricultural loans*
234,681 + 15,829 + 37,305
Loans to brokers and dealers in securities.
7,707 +
165 +
2,551
Other loans to purchase and carry securities
54,816 + 22,592 + 33*718
Real estate loans........................................
65,634 —
329 +
1,788
Loans to banks..........................................
2,045 —
409
562
Other loans..................................................
86,629 — 4*641 +
9,164
Total loans................................................
451,512 + 33,207 + 85*964
Treasury bills................................................
60,356 +
7,489 + 14,374
Certificates of indebtedness......................
278,165 — 21*226 +
1,1$?
Treasury notes..............................................
327,616 + 66,971 + 101»43S
U. S. Bonds................................................
696,312 + 20,168 +1«6,327
Obligations guaranteed by U. S. Govt..
613 — 12,468 — 21,090
Other securities............................................
128,455 +
2,911 + 20,945
Total investments.................................... 1,491,517 + 63,845 +303,185
Balances with domestic banks................
114,658 + 12,853 +
897;
Demand deposits — adjusted**................ . 1,034,371 —k 56,823 +115,289
Time deposits................................................
306,571 +
4,036 + 64,848
U. S. Government deposits......................
342,461 +163,962 +158,214
Interbank deposits.......................................
589,991 + 16,143 +100,<>54
Borrowings...................................................
23,000 — 15,825 — 14,45d
•Includes open market paper.
**Other than interbank and Government deposits, less eash items on
hand or in process of collection.
Above figures are for selected member banks in St. Louis, Louisville,
Memphis, Little Rock and Evansville.
Page 11
National Summary of Conditions
BY BOARD OF GOVERNORS OF FEDERAL RESERVE SYSTEM
Industrial activity and factory employment con
tinued to decline slightly in May. Value of depart
ment store sales increased in May and the early
part of June, following the sharp decline in April.
Industrial production — As a result of further de
creases in activity at munitions plants, the Board’s
seasonally adjusted index of industrial production
declined in May to 227 per cent of the 1935-39
average as compared with 231 in April.
A further reduction in operations at shipyards
accounted for most of the decrease in activity at
munitions plants, although there were small de
creases in activity in the machinery and aircraft
and other transportation equipment industries. The
decline in aircraft was in accordance with reductions
in schedules made prior to V E day. At the end of
May the Army Air Forces announced a cutback in
procurement which will reduce total military air
craft production in the last quarter of the year to a
level 30 per cent below that of March.
Steel production was maintained at a high level
in May but declined somewhat during the first three
weeks of June. Production of nonferrous metal
products showed a sharp drop in May following a
large rise earlier this year. In June brass mill pro
ducts and aluminum were made available for gen
eral civilian use and after July 1 some steel also
will be released.
Production of textile, leather, paper, chemical,
and petroleum products showed little change in May
and total output of nondurable goods was at a
level 3 per cent above that of a year ago.
Coal production declined 8 per cent in May as
anthracite output dropped sharply due to interrup
tions in mine operations in the first three weeks of
the month. In the early part of June, production of
both anthracite and bituminous coal increased to
about the level that prevailed earlier in the year
but was still somewhat below the rate of output in
June, 1944. Output of crude petroleum was main
tained in record volume in May and the early part
of June.
Distribution — Department store sales, which had
declined sharply in April, increased in May and the
first half of June, after allowance is made for the
usual seasonal change. In May sales were 4 per
cent larger than in May, 1944, while sales during
the first two weeks of June were 16 per cent greater
than in the corresponding period last year.
Most classes of freight carloadings showed sea
Page 12
sonal increases in May and the early part of June
and remained at a level slightly above last year’s
high level. Railroad shipments of manufactured
goods, which reached a record volume in March of
this year, have declined only slightly since that time.
Commodity prices — Wholesale prices of con
sumer goods continued to advance from the middle
of May to the middle of June. Anthracite was
raised $1 a ton, food prices increased somewhat
further, and various miscellaneous products were
higher. On the other hand, it was announced that
maximum prices on used cars would be reduced 4
per cent on July 1 and additional new regulations
have been issued recently covering prices of cloth
ing, automobile repairs, and some consumer durable
goods.
Agriculture — Prospects for major crops have
deteriorated somewhat in the past month, but still
compare favorably with the past three years of
generally abundant harvests. A record wheat crop
of over a billion bushels was indicated by June 1
conditions; cold, wet weather in May has delayed
most other crops.
Milk production was at a record level in May and
6 per cent larger than last year, while marketings
of meat animals and poultry products were in
smaller volume.
Bank credit — During the four weeks ending June
13, covering the period of intensified sales of securi
ties to individuals in the Seventh W ar Loan, loans
and investments at reporting banks in leading cities
increased by close to 1.7 billion dollars. Loans for
purchasing and carrying Government securities rose
by 620 million dollars, as investors adjusted their
portfolios in anticipation of security purchases. Ad
vances to brokers and dealers accounted for 360
million of the increase and loans to others for 260
million. Government security holdings of reporting
banks rose by 825 million dollars, reflecting contin
ued purchases of bonds.
In the week ending June 20, when large payments
were made by corporations and others for securities
purchased in the Drive, there was a shift of de
posits from private accounts to reserve-free war
loan accounts and a consequent reduction of 440
million dollars in required reserves of member
banks. Member bank borrowings declined in the
week by nearly 550 million dollars. Reserve bank
holdings of Government securities, however, in
creased further.
@FedFRASER