Full text of Review (Federal Reserve Bank of St. Louis) : July 1949

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Volume X X X I

Number 7

JU LY 1, 1949

The Eighth District’s Paper Dollars
By and large, dollars are not easily come by in
the Eighth Federal Reserve District. This Review
has pointed out from time to time that per capita
income in this region runs substantially below the
national average. The district’s major economic
problem is to find means of increasing the average
number of dollars which go to its people.
One way of accomplishing this objective is to
build up industry in the district — particularly
industry that can use the district’s basic resources
as raw materials. And one of the region’s major
resources is its forests. Here, as wood is processed
into a variety of forms for final use, dollars can
almost literally be grown and then multiplied into
other dollars.
Paper dollars for the district come from an
industry that uses wood as a raw material. The
paper and allied products industry (as it is known
in the Census of Manufactures) represents a sub­
stantial— but not a major— economic activity in the
district. It offers possibilities for expansion through
(1) increased use of pulpwood which would directly
aid the tree grower, and (2) more processing plants
to use the basic product—w ood pulp— and the inter­
mediate products— paper and paperboard.
More than three-quarters of a century ago trees
were converted into wood pulp on a commercial
basis for the first time in the United States. The
installation of the first wood-grinding equipment
at Curtisville, Massachusetts in 1867 marked the
beginning of the nation’s modern paper and allied
products industry. A person living at that time
would have had difficulty foreseeing the extent to
which a later, more highly developed industrial
economy would become dependent upon this proc­




ess. He could not have envisaged the wide range
of products that it would make possible.
It also is unlikely that in 1867 anyone anticipated
how much timber would be needed today to supply
this industry, which is really a double one: first,
pulp mills turn wood into wood pulp, and then
other plants manufacture the pulp into paper and
a variety of other products. Today the paper and
allied products industry is one of the principal
markets for timber. It accounts for about 11 per
cent of the total volume of commodity drain on the
commercial forests of the country. Last year some
21 million cords of pulpwood were consumed in the
domestic pulp industry. Since 1939 consumption
has almost doubled, and there are estimates that
50 years from now requirements will total 40 million
cords annually.
Whether or not the industry a half century
hence will consume double the present quantity of
wood used, there is little doubt that the long range
trend is toward a considerably higher level of timber
requirements than that of even the postwar peak
years. This trend is of particular importance to
those geographical regions with (a) large forest
areas at the present time and (b ) climatic and other
natural conditions conducive to a rapid reproduction
of timber that is suitable to the pulping process.
THE

P A P E R A N D A L L IE D P R O D U C T S
IN D U S T R Y — W H A T I T IS

The modern paper-making industry came into
existence in this country when the process of con­
verting trees into pulp was first put on a commer­
cial basis. Today the industry is a great deal more
complex than it was in 1867. At that time the pulp­
ing process had but one end-product—paper. Now
woodpulp is used not only in the production of

paper but is transformed into textiles, chemicals
and plastics as well. The industry has also grown
more complicated since the development of a host
of new uses for paper. Originally the end-use of
paper was to provide a means of recording the
written or printed word. Today, paper and paper­
board are manufactured into hundreds of products
used in the home, in construction, trade, transpor­
tation, and throughout industry generally.
As classified by the Census of Manufactures, the
paper and allied products industry has three major
divisions: pulp mills, paper and paperboard mills,
and plants processing paper and board into other
products. In 1947, the total industry had 4,100
manufacturing establishments, employing 450,000
workers. Of 19 specific major industry groups it
ranked eleventh in terms of value added by manu­
facture and thirteenth in terms of production work­
ers employed. Its shipments totaled $7.1 billion
in value, and it spent $4.2 billion for materials, fuel,
electricity and contract work.
The table shows the detail for the three major
segments of the industry. Pulp mills with large
capital investment requirements are relatively few
in number but in general are large-scale enterprises.
Paper and board mills also are fairly large-scale
establishments. The great bulk of the number of
plants in the industry are engaged in converting
paper and board into thousands of products.
T H E P A P E R A N D A L L IE D P R O D U C T S IN D U S T R Y
I N T H E U N I T E D S T A T E S I N 1947
Paper
P aper
and
Pulpand
B oard
Mills
B oard
Products
N um ber o f establishments ..............................
226
665
3.212
148
252
so
T otal salaries and wages (m illion s)............
$462
$148
$671
P roduction and related workers (0 0 0 )..........
129
45
215
M an-hours— production workers
(m illions) .........................................................
100
298
454
$382
$127
$502
.....................
V alue o f shipments (m illions)
$2,812
$3,300
$940
Value added b y m anufacture (m illion s)......
$1,050
$1,409
$416
Expenditures for new plant and equipment
(m illions) .........................................................
$205
$112
$86
$2,200
$1,500
Value o f shipments per production worker.. $2,100
$9.44
$7.27
V alue o f shipments per m an-hour.................
$9.40
$8.14
$6.55
V alue added per production w orker...............
$9.24
$3.52
$3.10
V alue added per m an-hour..............................
$4.16
Capital expenditures per production worker $1,910
$1,590
$520
S ou rce: Census o f M anufactures, 1947, preliminary reports. L ast five
items calculated from basic data.

Pulp Mills.— Timber production and marketing is
directly related to the paper and allied products in­
dustry at the point where trees are converted
into wood pulp. This pulping stage is the initial
step in the manufacturing process. In 1947 there
were 226 pulp mills in the United States. These
mills employed approximately 12 per cent of the
production workers in the paper and allied products
industry that year, and shipments were valued at
$940 million.
Page 94




Last year the domestic wood pulp industry reached
an all-time peak of production. It turned out 12.9
million tons of pulp; in doing so it consumed more
than 21 million cords of wood. W ood may be re­
duced to pulp in four ways— by the sulphate or
Kraft process; the sulphite method; the soda proc­
ess; and the groundwood method. The essential
manufacturing process is similar for all three chemi­
cal processes, the principal variant being the chemi­
cal solution used. About 47 per cent of the wood
pulp manufactured last year was made by the
sulphate or Kraft process. The increased use of
this process is of particular significance to the South
and to this district, as will be pointed out in detail
later. Sulphite pulp tonnage in 1947 represented
22 per cent of the total, while output of soda pulp
amounted to only 4 per cent of all wood pulp ton­
nage. 73 per cent of all wood pulp produced last
year was thus produced chemically. O f the remain­
der, 17 per cent was reduced mechanically (by a
grinding process) and 10 per cent (also primarily
in the South) by miscellaneous means— i.e., semichemically reduced, defibrated or exploded.
Paper and Board.— After pulpwood is turned into
wood pulp, wood pulp is turned into paper and
paperboard. In 1947 paper and board plants em­
ployed roughly one-third of all the production work­
ers, and shipped 40 per cent of the total dollar
volume of shipments in the paper and allied prod­
ucts industry. Last year the industry produced
11.2 million tons of paper and 10.9 million tons of
paperboard.
For the past ten years tonnage has been divided
about equally between paper and paperboard; paper
output has been just slightly higher except during
the war period. The output of board has increased
considerably faster than that of paper in the past
30 years, however. From the early 1920’s, when
board amounted to roughly one-third of total ton­
nage, it has climbed to its present, relatively equal,
position.
Paper production can be divided into ten major
classes. The largest tonnage produced is in coarse
paper, which in 1948 (as generally for the past ten
years) accounted for 28 per cent of all paper produc­
tion. About two-thirds of the coarse paper output
is kraft paper— wrapping, bag, shipping sack, and
converting paper. Book paper is second largest in
volume, although it dropped slightly during the
period of the war.
Building and insulating paper have ranked third
in importance during the past two years after a
sharp increase in production during the war years.

Ten per cent of the nation’s paper output is in fine
paper (largely writing paper). And the rest of the
total paper tonnage includes sanitary paper, news­
print and groundwood paper, special industrial
paper, tissue paper, and absorbent paper.
About 11 million tons of paperboard were pro­
duced last year. Eighty per cent of the total was
in three types— container board, 47 percent; folding
boxboard, 20 per cent; and building board, 13 per
cent. Of the three, only building board has in­
creased in total output since 1940; the other two
have declined. The remaining 20 per cent is di­
vided among set-up boxboard, wet machine board
and cardboard, and “ other board” .
Paper and Board Products— The average con­
sumer comes in contact with the industry principally
through using paper and board products. These
have come into such widespread use and are such
an integral part of our life that it has been said that
a modern nation’s civilization can be measured by
its consumption of paper products. Such a criterion
would establish the United States as the most
civilized of all countries. Last year in the United
States every man, woman and child used about 357
pounds of paper. The extensive variety of paper
and board products manufactured in the United
States is suggested by the classification used in the
Census of Manufactures. Fifteen major groups
with a total of 123 subdivisions are covered in this
report.
The principal products of this industry are con­
tainers— including bags and shipping sacks. Ship­
ments of these products represented 60 per cent of
the value of all shipments of finished paper prod­
ucts ; plants manufacturing these products con­
sumed 73 per cent of the industry’s total tonnage
in 1947. The remainder of the tonnage was con­
sumed in the production of such items as sanitary
and health products, wrapping products (principally
waxed paper) and packaging accessories such as
corrugated paper sheets and rolls and gummed tape.
More than half (55 per cent) of the total em­
ployment in the paper and allied products industry
was in this paper and board products division in
1947. The division included also over three-fourths
of the industry’s establishments and nearly half the
dollar volume of finished product shipments. In
turning out these products the industry consumed
over 12 million tons of paper and board.

Massachusetts, Connecticut and Maine. By 1776
the industry was firmly established in this country.
For many years, papermaking was concentrated in
New England and New York. The native stands of
spruce in these states made an excellent groundw ood; with the discovery of the sulphite process
they were readily adapted to this first method of
making pulp.
As the nation and the industry expanded, papermaking facilities were established in the Lake
States of Michigan, Wisconsin and Minnesota,
where there were large stands of spruce and balsam;
then in the Far West, where the huge stands of
western hemlock and true firs could be utilized.
At the beginning of the twentieth century over
two-thirds of the industry was still concentrated in
the New England states, New York and Pennsyl­
vania. Today, in terms of the number of estab­
lishments, production worker employment and value
added by manufacturer, individual eastern states
continue to hold the lead. In 1947 New York and
Pennsylvania had the largest number of establish­
ments and production workers; they ranked, re­
spectively, first and second in terms of value added
by the manufacturing process. It should be pointed
out, however, that as a region the states in the
PAPER

AND

A L L IE D

R E G IO N AL

PRODUCTS

GROWTH - 1939

INDUSTRY

TO

1947
Percent

Percent

0

80

20

i-------- r

100

SOUTH

PACIFIC

ALL OTHER

N. CENTRAL

MIDDLE
ATLAN TIC

NEW ENGLAND

R E G IO N A L D IS T R IB U T IO N A N D

GROW TH

The first paper mill in the United States was
built in Pennsylvania in 1690. Later, other mills
were constructed in that state and in New York,




fcljijljij NO. O r

E S T A B L IS H M E N T S

VALUE
SO U R C E-

C ensus

ADDED
of

BY

P R O D U C T IO N

W ORKERS

M ANUFACTURE

M a n u fa c tu re s

Page 95

INCREASE IN WOOD PULP CAPACITY
BY

Percent

ATLANTIC

R E G IO N S

Percent

ENG LAND

NOTE: 1950 Estimated on bos it of capacity under
definitely projected.
SO U R C E :
U. S. Pulp P ro d u ce r*
Attn.

construction

or

Great Lakes area narrowly led those on the middle
east coast (not including New England) in both
number of production workers and value added by
manufacture. Louisiana was the only southern state
ranked in the highest ten, and then only on the
basis of employment.
THE INDUSTRY IN THE SOUTH
A lack of statistical data makes it difficult to
describe the pulp and paper industry within the
precise limits of the Eighth District. Material is
available for district states, but this includes the
parts of the states outside the district. The problem
can be handled indirectly, however, through the
use of regional information. Most of the forces
which affect the industry in the South operate in a
large portion of the Eighth District. In Arkansas,
for example, and the district portion of Mississippi,
the availability of timber and other natural re­
sources has led to the establishment of pulp and
paper mills that are of importance to the economies
of these areas.
Statistics covering the entire paper and allied
products industry, it should be noted first, do not
show how important a region or a state is in terms
of each separate division of the industry. This is
particularly significant when one tries to evaluate
both the present stage of development in the
southern industry and the growth of the industry in
the South. At the present time the South is more
important as a producer of pulp (and hence a relPage 96




atively larger consumer of pulpwood) than as a
producer of paper and paperboard or of finished
paper and board products.
A t the beginning of 1949, approximately one-half
of the nation’s total annual wood pulp capacity was
located in the South.* The region had over fourfifths of the total sulphate capacity, about onefourth of the soda pulp capacity, one-fifth of the
groundwood capacity, and more than half of all
other grades of wood pulp capacity. The southern
industry is a billion dollar industry, including timber
land owned and controlled by the operating com­
panies or by individuals selling stumpage to the
mills’ contractors. Capital investment in plant and
equipment alone is estimated at $625 m illion; annual
paper sales are valued at $820 million. Last year
southern mills accounted for 45 per cent of the
total national pulpwood consumption and produced
almost one-half of the nation’s total wood pulp
tonnage.
Growth in the South.— The development of the
pulp and paper industry in the South coincides with
the expansion of the sulphate pulping process. The
first mill to manufacture pulp from southern pine
by the sulphate process was built in Texas in 1911.
The industry grew rapidly, and by 1929 southern
kraft mills accounted for about 15 per cent of the
nation’s annual wood pulp capacity. Twenty years
later, 45 per cent of the U. S. capacity utilized the
sulphate process. During the same twenty-year
period, total annual capacity in the South increased
from less than one-fifth to about one-half of total
national pulp capacity. The consumption of pulp­
wood since 1929 has grown at a very similar rate—
from less than one-fifth of the national total to
nearly half.
The evidence, although not conclusive, points
toward the fact that the South has expanded its
pulp mills and its plants for producing paper and
paperboard rather more than its facilities for manu­
facturing finished paper and board products. Last
year, for example, the South produced only 28 per
cent of the nation’s paper and paperboard. W hile
total employment of production workers in the in­
dustry increased 78 per cent from 1939 to 1947, gains
of 121 per cent were recorded in pulpwood con­
sumption, 111 per cent in w ood pulp production,
96 per cent in daily average wood pulp capacity,
and 90 per cent in paper and board production. It
is significant, however, that the southern states
since 1939 have shown considerably larger percent* T he southern region as defined b y the U . S. P ulp P rodu cers’ A ssociation,
the source o f these figures, includes Alabam a, Arkansas, Florida, G eorgia,
M aryland, Mississippi, N orth Carolina, South Carolina, Tennessee and
Texas.

age increases than any other important producing
region in production worker employment and value
added by manufacture.
Reasons for Growth in the South.— The shift of
the paper industry’s capacity to the South was al­
most inevitable. The production of paper requires
timber, one of the principal natural resources of
the South. This region, with only 17 per cent of
the nation’s land area, contains 30 per cent of its
total forest area and about 40 per cent of all its
commercial forest area. A little less than one-half
of the saw timber acreage and not quite one-third
of the pole timber acreage in the nation’s com­
mercial forest lands are in the South. In terms of
the volume of timber in commercial forests, the
South has 24 per cent of the nation’s saw timber,
35 per cent of the pole timber and 28 per cent of all
timber in commercial forest areas.
In the second place, climatic and soil conditions
in the South are such that the species of trees best
adapted to present pulping operations enjoy a rapid
growth rate. More than half the estimated annual
growth of soft-wood timber in commercial forests
in the United States is in the South, while 48 per
cent of annual growth of all timber on commercial
forest lands is in these states.
The presence of large timber resources does not
tell the entire story. Expansion of the industry in
the South was stimulated‘too by the fact that log­
ging operations can be maintained through a con­
siderably larger period of the year in the South than
in most other regions of the country. Among other
things, this means less pressure to build up and
finance large pulpwood inventories for use during
the winter months. Also, practically all the com­
mercial acreage is easily accessible by water, rail or
highway. Fnally, the availability of adequate sup­
plies of water, chemicals, electric power and natural
gas also has been an important factor.

panded as rapidly as manufacturing generally in
these states, either in terms of establishments or
employment. Only in Arkansas, Mississippi and
Tennessee did paper industry employment make up
a larger percentage of all manufacturing employ­
ment in 1947 than in 1939. In terms of the value
added by manufacture, however, the ratio to the
state’s total increased in each state except Illinois
and Kentucky. The most significant increases were
in Arkansas, where the dollar value of the manu­
facturing process climbed from 6.6 per cent of the
state’s total in 1939 to 8.3 per cent in 1947, and in
Mississippi, where the ratio jumped from 7.4 per
cent to 12.2 per cent. These relative gains were
substantially more impressive than the increase for
all seven states combined, where the ratio was
2.5 per cent in 1939 as compared with 2.6 per cent
in 1947.
The Eighth District, by contrast with the South
as a whole, is more largely represented in the paper
and board portion of the industry, and in the manu­
facture of paper and board products, than in the
production of wood pulp. Although census data are
not available for the district proper, Lockwood’s
Directory of the Paper and Allied Trades for 1947
lists three wood pulp mills in the district. Tw o of
these are in Arkansas and one in Mississippi,* and
each utilizes the sulphate process. These are inte­
grated operations, the Arkansas mills producing
kraft products such a bags, wrapping paper, folding
boxboards, gumming and water repellent paper and
the like, while at the Mississippi mill kraft special­
ties and bleached machine glazed specialties from
pulp produced in the mills are manufactured.

THE INDUSTRY IN THE EIGHTH DISTRICT
These factors operative in the South are pri­
marily those which determine the status of the pulp
and paper industry in the Eighth District. In the
district states, including the portion of these states
outside the Eighth District boundaries, 587 estab­
lishments of the industry were enumerated in the
1947 Census of Manufactures. Production worker
employment totaled 51,000, and the value added by
manufacture was more than $354 million. Since
1939 there was an increase of 27 per cent in the
number of establishments, 47 per cent in employ­
ment and 228 per cent in value added by manu­
facture.
Despite these increases, the industry has not ex­




* T he portion o f M ississippi outside the district also has a number of
pulp mills.

Page 97

PRODUCTION WORKER

EMPLOYMENT

PAPER AN D A L L I E D P R O D U C T S
PERCENT OF TOTAL IN E A C H D IST R IC T STATE

SOU RCE:

Compiled

From

C tn tu s of M anufacture*

Report

PULPWOOD PRODUCTION AND CONSUMPTION
IN THE EIGHTH DISTRICT
About 43 per cent of the land area in this district
is forest land, according to estimates made in 1945
by the U. S. Forest Service and various state and
other forestry organizations. The percentage varies
from 17 per cent in the district portion of Illinois to
59 per cent in Arkansas. In more than one-fifth
of the 362 counties in the district, forests cover 60
per cent or more of the land area. The rate of
growth in much of the district is rapid, but despite
this the volume of timber being removed from the
district’s commercial forest lands exceeds that of
the annual growth.
Most of the annual timber growth is in the forests
of Arkansas and Mississippi. These two states ac­
counted for one-half of all timber growth and for
63 per cent of all saw timber growth in the district
states in 1944. As noted earlier, it is in these states
that the district’s wood pulp industry is located.
The amount of timber cut from the forests in
Arkansas for pulpwood in 1944 was estimated at
42 million cubic feet. Consisting almost entirely of
softwoods, the pulpwood drain represented about
6 per cent of the total commodity drain on commer­
cial forests in the state that year. In Mississippi,
pulpwood volume in 1944 was estimated at 11 per
cent of the total commodity drain. A sizable portion
of that amount, however, was taken from forests
outside the Eighth District. Approximately onethird of Mississippi’s forest acreage is included in
Page 98




this district. Data for subsequent years are not
available but if production in these two states in­
creased at the same rate as nationally, production in
1948 would have climbed to about 55 million cubic
feet in Arkansas and 95 million in Mississippi.
Much of the pulpwood produced in Arkansas is
manufactured into wood pulp and paper in the
mills located in that state. A substantial amount,
however, also is shipped to mills located just across
the state line in northern Louisiana. At the same
time, part of the pulpwood requirements at the mills
in Arkansas are met by importing pulpwood from
Texas, Oklahoma and Louisiana. In general, ship­
ments are by rail, although trucking operations have
increased somewhat in importance. W ith present
truck facilities and under current operating condi­
tions, a forty-mile truck haul approaches the max­
imum, according to one operator. It is hoped, how­
ever, that newly designed equipment may make it
feasible to extend truck operations to as much as
a 90-mile radius.
A large share of the timberland in this district is
in small holdings— much of it in farm woodlots.
Marketing timber provides additional income for
the farmer. In the southern portion of this district,
a farmer generally sells his pulpwood to the mills
by one of several methods. He may sell, for a lump
sum, all the stumpage on the tract. Currently for
this he may net $1 to $3 per cord. Or the trans­
action may involve a straight stumpage sale by
the cord, in which case he may receive from
$1.50 to $3.00 per cord. If the farmer prefers to
utilize his own labor by cutting the pulpwood and
stacking it in the woods he may obtain upwards
of $5.00 per cord. By cutting the wood and banking
it along the highway, he can increase his return
to perhaps $6.00 per cord. If, however, he has the
time and equipment he can cut the wood and de­
liver it to the railroad car and increase his return
to $10.00 per cord. Finally, pulpwood delivered to
the mill may bring above $11.00 per cord on a short
haul plus a premium of $1.00 per cord on longer
hauls. Shipped by rail, the present pulpwood prices,
f.o.b. cars, are about $10.75 per cord where the
freight charge is in excess of $4.00 per cord, and
$11.10 where this transportation cost is less than
$4.00.
THE INDUSTRY AS A FUTURE MARKET
FOR TIMBER
The present is an uncertain time in which to at­
tempt to gauge the future level of pulpwood con­
sumption. So far this year the paper and paper­
board industries have operated well below the levels

of the two previous years in terms of the percent­
age of capacity actually utilized. In part this re­
flects the general decline from peak levels of busi­
ness activity experienced so far this year. It may
also reflect the fact that considerable new productive
capacity has come into operation.
In the first quarter of this year consumption of
pulpwood nationally was about 2 per cent larger
than in the same period in 1948, reflecting an 11 per
cent increase in the South; in all other regions, con­
sumption was below last year. Actual receipts of
pulping wood from U. S. forests have been smaller
this year as inventories were being used up.
Total production of wood pulp is slightly larger
than last year because of gains in sulphate and
groundwood pulp. Sulphite production and output
of all other pulp is below the volume of the first
quarter in 1948. Physical volume of paper and board
output in the first quarter was off about 8 per cent
from a year earlier.
The current situation in the industry nationally
may not present an accurate long-range view of the
industry in the South. In this region the industry
has certain definite advantages which point toward
further growth. Fundamental, of course, are the
natural advantages of timber resources that can be,
and in many areas under proper management are
being, replaced at a considerably faster rate than in
other sections of the country. In addition the aver­
age mill in the South is newer, larger and more
efficient than the average in most other parts of
the country.
It would appear that these factors tend to give
the southern industry something of a long-range
advantage over the industry located in other regions.
If these advantages accrue to the southern pulp and
paper industry as a whole, the potential for this
district should be somewhat the same, particularly
in the southern part of the district.
In addition to the general possibilities there ap­
pears to be a real opportunity for further expansion
in at least one major field. This is the production




of newsprint. Last year consumption of newsprint
amounted to about 5.1 million tons. Yet domestic
production totaled only 866,000 tons. The remainder
was supplied by imports, 88 per cent of which came
from Canada. In the 1920’s domestic production
ranged from 1 to 1.5 million tons annually. In 1939
it amounted to 954,000 tons. Production in the
South and in the nation will be increased consider­
ably when a new plant in Alabama comes into pro­
duction next year. However, it should be noted that
the output of that mill already is contracted for. If
newsprint can be produced in the South on a com­
petitive basis with imported newsprint, it would ap­
pear to offer a real opportunity for expansion in
that direction in the South.
Even without further expansion of capacity in
this region, the existing industry provides a large
market for pulpwood. The basic problem in the
long run in this region is more likely to be that of
an assured supply of pulpwood rather than one of
a surplus— unless timber management practices are
improved over a considerably larger area. Most
mills have excellent forestry programs in operation
in land they control and are attempting to extend
these programs to suppliers’ timber holdings.
The district can expand its facilities for process­
ing wood pulp into paper and the other related
goods. And given the area’s basic advantages
in timber growing, it may well be possible to step
up pulpwood output to provide a basis for the ex­
pansion of pulp production itself. Dynamic indus­
trial growth of this sort is what the district, particu­
larly the southern part, needs most today. The
recent study by the National Planning Association
Committee of the South emphasizes how important
a factor this can be in raising the general income
level of the whole South. W ith the great forest
resources of this region it seems logical to expect
an important phase of industrial growth to occur in
the paper and allied products lines.
W eldon A. Stein

Page 99

Survey of Current Conditions
Recent surveys of consumers to determine, among
other things, their intentions with respect to ex­
penditures this year suggest that economic activity
may receive more support from this segment than
has been anticipated. A firm forecast of the volume
of consumers’ expenditures in 1949, based solely on
the study released by the Board of Governors of
the Federal Reserve System, would be risky. Never­
theless, this survey can be taken as a reliable in­
dication that a substantial potential market for
consumers’ durables and housing still exists. At the
same time these findings provide business with a
strong incentive to adjust price schedules and prod­
uct quality and design to levels where this demand
can be met.
This survey was made in the early part of the
year, at a time when total personal income was only
about 2 per cent larger than in April, the most
recent month for which figures are available. Much
of that decline in income resulted from a drop in
farm income; total nonagricultural income in April
was only about 1 per cent below the January level.
This stability in income, at a time when production
and employment cutbacks were rather severe,
coupled with the fact that the potential market for
consumers’ goods remains large will probably offer
WHOLESALING
Line of Com m odities
N et Sales
Data furnished by
M ay, 1949
Bureau o f Census
com pared with
A p r., 1949
U .S . Dept, o f Com m erce*
M ay, 1948
D rugs and Chem icals................. . — 5 %
+ 7%
D r y G oods .................................... . — 7
— 16
. — 1
— 10
H ardware ..................................... . — 4
— 17
T o b a cco and its P rod u cts........ . + 3
+ 2
M iscellaneous .............................. . — 2
— 4
**T ota l A ll L in es.................... . — 3 %
— 11%
•Preliminary.
* Includes certain items n ot listed above.

Stocks
M ay 31, 1949
com pared with
M a y 31, 1948
— 4%
— 18
— 9
+11
— 1
+13
— 3%

PRICES
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
B ureau o f L a b or
M a y ,’ 49
Statistics
com pared with
(1 9 2 6 = 1 0 0 )
M a y ,*49
A p r .,*49
M a y ,*48
A p r .,’ 49
M a y ,’48
A ll Comm odities.... 155.7
156.9
163.8
— 0 .8 %
— 4.9%
F arm Products.... 171.2
170.3
189.1
+ 0 .5
— 9.5
F ood s ...................
163.9
162.9
177.4
+ 0 .6
— 7.6
O ther ...................
146.7
148.8
148.9
— 1.4
— 1.5
R E T A I L F O O D P R IC E S
Bureau o f L a b or
M ay 15,1949
Statistics
M a y 15,
A p r. 15,
M a y 15,
com pared with
(1 9 3 5 -3 9 = 1 0 0 )
1949
1949 1948
A p r. 1 5 /4 9 M a y 15,*48
U . S. (51 citie s )....202.4
202.8
210.9
— 0 .2 %
— 4 .0 %
St. L ou is...............207.8
207.5
218.2
+ 0 .1
— 4.8
L ittle R o ck .......... 201.9
201.2
209.2
+ 0 .3
— 3.5
Louisville .............189.4
187.6
201.6
+ 1 .0
— 6.1
M em phis ............ 215.6
214.9
223.2
+ 0 .3
— 3.4

Page 100




considerable support to the economy in the coming
months.
These indicators also have some possible impli­
cations with respect to the outlook for consumers’
prices. Apparently consumers believe prices are
going to decline further from the levels that pre­
vailed in January. It may well be that part of
their intentions with respect to expenditures were
based on that assumption. If so, it would seem to
put substantial pressure on manufacturers and dis­
tributors to work toward lower prices. Actually,
the sales experience so far this year suggests that
large price reductions, on the average, are not
necessarily required to stimulate demand. Physical
volume of sales to consumers has held up pretty
well and dollar sales are not sharply below last
year’s volume.
EMPLOYMENT
Nonagricultural employment in the nation dropped
slightly between April and May, continuing the
downward trend evident since last December. This
movement has been interrupted but once in the past
six months— a small increase occurred between
February and March. A large seasonal rise in
agricultural employment resulted in a gain in total
employment between April and May.
Total employment so far this year has remained
slightly higher than the year ago level, except in
April. Higher total employment this year reflects
gains in agricultural employment, which had been
declining steadily since the end of the war but in
1949 has been increasing. Thus, during the first
five months of 1949 it averaged 5 per cent higher
than in the first five months of 1948, which in turn
averaged 4 per cent below the same period in 1947.
Average total employment for the January-May
period was 0.4 per cent higher than for the com­
parable 1948 period, while nonagricultural employ­
ment was 0.7 per cent lower.
The labor force—the number of people working
or seeking work— has continued to grow. Thus,
while total employment is approximately as high as
last year, unemployment has almost doubled. In
May, 1949 about 5 per cent of the labor force was
unemployed as compared with 3 per cent in May,
1948. Much of the unemployment increase occurring
between April and May was due to the entrance
of students into the labor market for either regular
or summer jobs. Unemployment probably will in­

crease during the next couple of months as many
additional students seek summer jobs.
The number of workers separated from their jobs
in April was just about the same as last year. The
big difference from a year ago, however, was that
only half as many people quit their jobs, while more
than twice as many were laid off. Also, the hiring
or accession rate was lower than a year ago, result­
ing in increased unemployment. The lay-off rate
was at a postwar high in April as approximately
3 out of every 100 workers were laid off. Industries
with the highest lay-off rates included iron and
steel, machinery, transportation equipment, nonferrous metals, furniture, textile-mill products and
food.
About one out of every 25 persons at work in
May was involuntarily working part-time (less than
35 hours a week) according to a special Bureau of
the Census survey. Almost two-thirds of these
involuntary part-time workers had jobs which ordi­
narily provided full-time work, while the remainder
had regular part-time jobs but wanted full-time
employment. Similar surveys conducted in March
and September, 1948, showed only about half as
many part-time workers who wanted full-time jobs,
as did the May survey. However, 38 per cent of
the persons employed in nonagricultural industries
were still working more than 40 hours a week in
May.
Despite the increase in part-time workers, the
average weekly hours worked by all employees in
nonagricultural industries in May, 1949 was 41.7
as compared with 41.9 in May, 1948. Manufacturing
and construction were the only industries to show
any appreciable decline over the past year in the
proportion of employees working more than 40
hours a week. Even in manufacturing, where the
majority of the recent cutbacks occurred, 19 per
cent of the workers had a work week in excess
of 40 hours in May.
In the St. Louis area nonagricultural employment
decreased slightly between April and May as the
drop in manufacturing employment was too large
to be offset completely by seasonal increases in
other industries. Total employment was about the
same in May as in April because of a gain in agri­
cultural employment which offset the decline in
nonagricultural industries. Normally, both total
and nonagricultural employment increase between
these two months.
Employment increased in the construction, public
utilities and service industries in St. Louis between
April and May, declined in manufacturing, and
remained about the same in mining, trade, finance




and government. The drop of almost 3,000 in manu­
facturing was the largest monthly decline since the
immediate postwar, period. The primary and fabri­
cated metals, leather, apparel, ordnance and ma­
chinery industries employed fewer people, while
the transportation equipment and food industries
increased employment.
Almost 6,000 fewer people were working in the
St. Louis area this May than a year ago. April and
May, 1949 were the only months since the end of
the war in which St. Louis employment did not
show a gain over the previous year. Finance and
service were the only industries employing more
people in May than they did a year ago, although
the declines in the other industries, except for manu­
facturing, were insignificant. Total nonmanufactur­
ing employment was approximately the same as
a year ago, with manufacturing accounting for
practically all the decline.
In all seven of the Eighth District states except
Arkansas, nonagricultural employment was very
slightly lower, and manufacturing employment was
considerably lower in the first quarter of 1949 than
in the comparable period of 1948. Nonagricultural
employment in the seven district states was less
than 1 per cent lower than last year, while manu­
facturing employment was about 5 per cent lower.
INDUSTRY
The level of industrial activity in the district in
May was somewhat lower than in April and a year
ago. Compared with the previous month, operations
were scheduled at a lower rate in the basic steel
and lumber industries. Coal production was lower
than in April but oil output remained about the
same. Manufacturing activity, in the aggregate,
was off slightly. On-site construction activity was
slightly lower than in April although dollar value
of permits issued for new construction totaled
slightly higher.
Electric power consumed in the district’s major
industrial centers was below the April level and
for the first time in the postwar period was lower
than in the corresponding month of the previous
year. The 6 per cent drop compared with last year
was due to declines in Pine Bluff, Louisville,
Memphis and Evansville, which offset increases in
St. Louis and Little Rock. On a month-to-month
basis all cities registered decreases except St. Louis.
Manufacturing— Total manufacturing output in
the district in May was lower than in April,
although slight gains were registered in some lines,
primarily in the district’s smaller industrial groups.
Also trends were not the same in all parts of the
district. Operations decreased in the automobile,
Page 101

chemical, iron and steel, rubber, textiles, farm ma­
chinery, lumber and furniture industries. In some
parts of the district a lower level of operations was
indicated in the manufacture of machinery, food
products and stone, clay and glass products. District
output of metals and metal products and electrical
manufactures was about the same. Activity was
slightly higher than in April in the manufacture of
stone, clay and glass products, food products, ma­
chinery and transportation equipment, and in the
brewing industry.
Steel—Operations of the basic steel industry in
the St. Louis area in May were scheduled at 61
per cent of capacity— a two-year low. The rate was
9 points below the April level and 11 points lower
than a year ago. The reduced activity was partly
due to repairs and relining of furnaces and slag
mills, but also reflected decreased orders. The mills
report than consumers are buying as close to current
requirements as possible in nearly all major lines.
Demand continues fairly strong for pipe and con­
struction steel and that used in the manufacture
of agricultural machinery. Although demand is low
in the household goods lines, trade reports indicate
CONSTRUCTION
B U I L D I N G P E R M IT S
M on th o f M ay
N ew C onstruction
Repairs, etc.
N um ber
(C o st in
N um ber
C ost
Cost
1948
thousands) 1949
1949
1948
1949
1948
1949
1948
103 $ 139 $
E vansville ....
64
71 $ 163 $ 183
98
55
42
81
353
499
L ittle R ock .
221
294
161
148
L ouisville .... 152
209
831
1,432
91
115
54
116
834
M em phis ..... .1,951
3,782
2,869
181
241
225
155
320
St. L ou is .... . 263
318
338
2,204
2,198
361
515
M a y Totals..2,472 1,515 $7,333 $7,181
969 1,031 $ 940 $ 989
A p r. Totals..2,177 1,796 $6,561 $8,411
838 1,246 $1,012 $1,040

INDUSTRY
C O N S U M P T IO N O F E L E C T R IC IT Y
N o. o f
M a y,
A p r.,
M ay,
M ay, 1949
( K .W .H .
C ustom - 1949
1949
1948
compared with
in th o u s .)
era* K .W .H . K .W .H .
K .W .H . A pr. ,’ 49
M ay,’48
E vansville .... 40
8,169 8,227
8,618 R
— 0 .7 % — 5.2%
L ittle R o c k .... 35
4,547 4,933 R
4,221
— 7.8
+ 7.7
Louisville ...... 80
54,985 68,942
67,128
— 20.2
— 18.1
M em phis ........ 315,731
6,167
6,149
— 7.1
— 6.8
P ine B lu ff ____ 26
4,629
4,706
6,033
— 1.6
— 23.3
St. L ou is ........ 139
80,811
79,971
76,822 R + 1.1
- f 5.2
T otals ........351 158,872 172,946 R
168,971 R — 8.1 % — 6.0%
*
iflHiiflfrial PHofnmoro
R — R evised.
A .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
F irst N ine Days
M a y,*49
A p r.,*49 M a y ,’ 48 June,*49 June,’ 48 5 m os. *49 5 mos. *48
104,513
103,103
123,858
30,134
34,063
526,911
608,249
S o u rce : Term inal R ailroad A ssociation o f St. Louis.
C R U D E O IL P R O D U C T IO N — D A IL Y A V E R A G E
M ay, 1949
A p r.,
M ay,
com pared with
1949
1948
A pr., 1949 M ay, 1948
81.2
86.4 — 1%
— 7%
175.9
171.6
+ 1
+ 3
23.3
20.7
+ 5
+18
23.4
25.2
+ 1
— 6
303.8
303.9
+ 1%
+ 1%

( I n thousands
M a y,
o f bbls.)
1949
Arkansas ........................
80.3
Illin ois .......................... 177.4
Indiana .......................... 24.5
K en tu cky .....................
23.7
T otal ........................ 305.9

Page 102




that in many cases inventories have been adjusted
and demand is expected to increase.
Lumber— Production of basic lumber in May
remained at about the April level but was consider­
ably below that of a year ago. The lumber market
continues very soft especially in the hardwood
lines. Buying by furniture and flooring manu­
facturers is especially slow. The low production
in recent months may help to stabilize the industry
inasmuch as output has been reduced to a level
about equal to orders.
Operations of southern hardwood mills in May
averaged only 58 per cent of capacity compared
with 59 per cent in April and 82 per cent a year
ago. W eekly production by southern pine operators
in May was 2 per cent higher than in April but
29 per cent lower than in May, 1948.
Whiskey— At the end of May, 30 of Kentucky’s
63 distilleries were in operation. This compares
with 37 at the end of April and 42 a year ago.
W hiskey production in April totaled 6.3 million tax
gallons, 16 per cent less than in March and 40
per cent less than in April, 1948. The lower opera­
tions of the past two months reflect in part the
beginning of the usual seasonal decline but also
the all-time high level of stocks in bonded ware­
houses. United States production in April was 20
per cent lower than in March.
Meat Packing—Meat packing operations in the
St. Louis area in May were slightly higher than
in April but much lower than a year ago. In May
there were 380,000 animals slaughtered under Fed­
eral inspection compared with 365,000 in April and
529,000 in May, 1948. Killings of sheep and calves
were higher than in the previous month, whereas
slaughter of cattle and hogs was about the same.
Total United States slaughter in May was 2 per
cent lower than in April but 2 per cent higher than
in May a year ago.
Shoes—According to preliminary estimates, shoe
production in the district in April totaled 7.3 million
pairs, a decline of 15 per cent compared with the
previous month and of 11 per cent compared with
a year ago. For the first four months of the year,
output in 1949 totaled 10 per cent less than in the
comparable period of 1948. United States produc­
tion in the first four months of 1949 was 5 per cent
below that of 1948.
Oil and Coal— The daily average output of crude
oil in the district in May was fractionally higher
than a year ago. Daily output averaged 306,000
barrels compared with a 304,000-barrel average in
April, 1949 and May, 1948. On a month-to-month
basis a 5 per cent increase in Indiana output along

with slight increases in Illinois and Kentucky offset
the slight decline in production in Arkansas.
Coal production in the district’s mines in May
totaled 7.9 million tons, a decline of 7 per cent from
April and of 24 per cent from the 10.4 million tons
mined in May, 1948. Compared with April, output
was off in all the producing states, ranging from a
slightly less than 1 per cent decrease in western
Kentucky to a 43 per cent decline in Arkansas.
On a year-to-year basis substantial decreases were
registered in all producing states. United States
production in May totaled 48 million tons, 2 per
cent less than in April and 14 per cent less than
in May, 1948. Stocks of coal in the United States
in April stood at about 65 million tons, about 5
million tons higher than in March, nearly double
the April, 1948 total, but about 4 million tons below
the postwar peak in November, 1948.
Construction— The value of permits awarded for
new construction and repairs in the district’s major
cities in May totaled $8.3 million. This was 9 per
cent higher than the April total and about 1 per
cent higher than awards in May a year ago. The
month-to-month rise was due to a 39 per cent
increase in the value of permits in Memphis; con­
siderable decreases were registered in Little Rock
and Evansville, and there was a slight drop in
permit value in Louisville. The St. Louis total was
unchanged.
Permits awarded for new construction totaled
$7.3 million, a 12 per cent increase over April. This
was traceable to residential construction, which—
accounting for $4.6 million of all new construction—
increased 35 per cent over the April total. The value
of residential permits* in Louisville, St. Louis and
Memphis increased substantially (more than double
in the case of Memphis), offsetting declines of more
than two-thirds in Little Rock and Evansville.
Dollar value of new residential construction was
15 per cent higher than that of May a year ago,
whereas new nonresidential permits were off 14
per cent.
TRADE
Consumer spending at district department stores
during May declined 5 per cent from that of April,
and was 3 per cent less than that of May, 1948.
In the first five months of 1949, district sales aver­
aged 3 per cent less than in the same period in
1948. Of the major cities of the district, sales
volume increased 2 per cent in Fort Smith and
2 per cent in Memphis; declines ranged from 5 per
cent in St. Louis to 16 per cent in Springfield. In




TRADE
D E PA RTM EN T STORES
S tocks
S tock
__________ N et Sales___________ on H a n d
T urnover
M ay, 1949
5 m os.’ 49 M ay 31,'49
Jan. 1, to
com pared w ith
to same com p, with
M ay 31,
A p r.,*49 M a y ,’ 48 period ’ 48 M a y 31,’ 48 1949
1948
8th F . R . D istrict......
5%
— 3%
— 3%
— 6%
1.59
1.58
F t. Smith, A rk ......... — 7
+ 3
+ 2
— 15
1.64
1.56
L ittle R ock , A rk ...... .
7
— 1
- 0 — 6
1.68
1.71
Q uincy, 111.................. - 0 + 4
— 6
— 8
1.35
1.47
Evansville, In d ..........— 6
— 10
— 11
— 19
1.40
1.50
Louisville, K y ............— 17
— 3
— 1
— 4
1.74
1.76
St. Louis A r e a 1....... .— 3
— 4
— 5
— 6
1.57
1.57
St. L ouis, M o — - — 3
— 4
— 5
— 6
1.57
1.57
E . St. L ouis, 111...— 1
+ 4
— 5
..............................................
Springfield, M o ......... — 4
— 9
— 16
— 17
1.29
1.39
Memphis, Tenn..........+ 3
-0 + 2
— 3
1.69
1.56
*A11 other cities........— 6
— 2
— 2
— 9
1.27
1.26
*E1 D orado, F ayetteville, Pine B lu ff, A r k .; H arrisburg, M t. V ernon ,
111.; N ew A lbany, V incennes, I n d .; Danville, H opkinsville, M ayfield,
Paducah, K y .; Chillicothe, M o .; Greenville, M is s .; and Jackson, Tenn.
l
Includes St. L ou is, M o .; A lton , Belleville and E ast St. L ou is, 111.
Outstanding orders o f reporting stores at the end o f M ay, 1949 were
35 per cent less than on the corresponding date a year ago.
Percentage o f accounts and notes receivable outstanding M a y 1, 1949,
collected during M a y, b y c itie s :
Instalm ent E xcl. Instal.
A ccou n ts A ccou n ts
F o rt Smith............ %
45%
L ittle R ock.... 20
46
Louisville ...... 24
48
Mem phis ........ 27
45

Instalm ent E xcl. Instal.
A ccou n ts A ccoun ts
Q u in cy ........... 2 3 %
61%
St. L ou is ....... 23
55
O ther Cities . . 1 9
54
8th F .R . D ist. 23
51

IN D E X E S O P D E P A R T M E N T S T O R E S A L E S A N D S T O C K S
8th Federal Reserve D istrict

Sales (daily average), u n ad justed 8...................
Sales (daily average), seasonally a d ju sted 2....
Stocks, unadjusted8 ................................................
Stocks, seasonally a d ju ste d 8................................
* D aily A verage 193 5 -3 9= 1 0 0.
8 End of m onth A vera ge 1935-39 = 100.

M a y,
A p r., M ar.,
M ay,
1949
19491949
1948
328
327
287
333
335
321
309
340
296
321314
313
296
321
323
313

S P E C IA L T Y ST O R E S
Stocks
Stock
N e t Sales
on H and
Turnover
M ay, 1949
5 m os.,’49 M a y 31,’ 49
Jan. 1, to
com pared with
to same com p, with
M ay 31,
A p r.,*49 M a y ,*48 period *48 M ay 31,’ 48 1949
1948
M en’ s Furnishings— 10%
— 5%
+ 1%
— 7%
1.13
1.17
B oots and Shoes..— 27
— 6
+ 2
— 9
1.83
1.76
Percentage o f accounts and notes receivable outstanding M a y 1, 1949,
collected during M a y :
B o o ts and Shoes...................... 4 6%
M en’s F u rn ish in gs................. 4 6 %
T rading d a ys: M a y, 1949— 2 5 ; A p ril, 1949— 2 6 ; M ay, 1948— 25.

R E T A I L F U R N I T U R E S T O R E S **
N e t Sales
Inventories
M a y, 1949
M a y, 1949
R atio of
com pared with
com pared w ith
Collections
A p r.,’ 49
M a y ,’ 48
A p r. ,’ 49
M a y,’ 48 M a y,’ 49 M a y,’ 48
2 6%
— 10%
29%
8th D ist. Total 1+ 11%
— 3%
— 5%
33
— 4
— 3
— 7
St. Louis A rea * + 1 5
36
— 4
— 3
33
36
St. L ou is........+ 16
— 7
—
12
—
4
—
16
19
Louisville A rea * + 1 9
19
— 12
— 4
— 17
18
17
Louisville ......+ 19
21
M em phis .......... + 7
+ 11
— 3
— 18
17
— 4
— 5
- 0 21
L ittle R o ck ....... .— 6
24
*
•
•
•
F ort S m ith ........— 17
+ 8
•N ot shown separately due to insufficient coverage, b u t included in
Eighth D istrict totals.
1 In addition to follow in g cities, includes stores in Blytheville, and Pine
B luff, A rkansas; H opkinsville, O w ensboro, K e n tu ck y ; Greenville, Green­
w ood, M ississippi; H annibal and Springfield, M issou ri; and Evansville,
Indiana.
* Includes St. L ou is, M isso u ri; A lto n , Illinois.
* Includes Louisville, K e n tu ck y ; and N ew A lbany, Indiana.
* * 4 4 stores reporting.
PE 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 S A L E S
M a y ,’ 49
Cash Sales ....................................................
13%
Credit Sales .................................................. 87
Total Sales ................................................ 100%

A p ril,’49
14%
86
100%

M a y,’ 48
15%
85

Page 103

Little Rock dollar sales volume was unchanged
from that in the first five months of 1948.
Data from a selected group of department stores
reporting weekly on specified major housefurnishing divisions indicate that the reduction in sales of
“ large ticket” items has been partly responsible for
lagging dollar volume. Sales of furniture and bed­
ding items during the week ending June 11 were
substantially under those last year; domestic floor
covering and major appliance sales were also off,
while sales in the radio-phonograph group, bol­
stered by sales of television sets, were but slightly
under year-ago volume.
On a seasonally adjusted daily average basis,
district sales in May were 335 per cent of the 1935-39
average as compared to 321 per cent in April and
340 per cent in May, 1948. Among the major cities
of the district, the Memphis index—385 per cent of
the base period— was higher than both April, 1949
and May, 1948. In St. Louis the index was higher
than in April but slightly under that of last May.
In Little Rock seasonally adjusted sales were under
those in the previous month but slightly higher than
a year ago, while in Louisville adjusted sales for
May were less than in both previous periods.
At those St. Louis stores reporting sales by
departments, main store departments average 9
per cent under last year while basement divisions
averaged 6 per cent over May, 1948. A few scattered
upstairs divisions gained over last year’s volume.
Declines were greatest in the miscellaneous depart­
ment classification (games, luggage, candy, cigar­
ettes, etc.), where sales averaged 22 per cent under
last year. Housefurnishings in main store depart­
ments totaled 13 per cent under May, 1948. In the
latter division, however, special promotions of
lamps and shades (12 per cent over a year ago) and
a continuing boom in sales of television sets (76 per
cent greater than last year) were responsible for the
largest gains, percentagewise, in the main store.
The contrast, percentagewise, between the gains
in upstairs and downstairs sales was highlighted
in the men’s and boys’ wear divisions. Upstairs
sales volume o f men’s and boys’ wear declined 7
per cent, while in the comparable downstairs di­
vision sales gained 20 per cent from May, 1948.
Main store women’s and misses’ ready-to-wear ap­
parel and accessories sales performance (down 3 per
cent and 5 per cent, respectively) also was bettered
in the comparable basement divisions, where sales
averaged 5 per cent more than in May, 1948. Even
though sales gains have been substantial in base­
ment divisions for quite some time, the increased
Page 104




PRIN CIPAL ASSETS AND LIA B ILITIE S
FEDERAL RESERVE BANK OF ST. LOUIS
Change from
M ay 18,
June 16,
1949
1948

June 15,
(I n thousands o f dollars)
1949
Industrial advances under Sec. 13b..$ ...............
O ther advances and rediscounts.......
4,987
U .S . Securities .................................... 1,051,692
T otal earning assets..-.................... $1,056,679

$ ...............
— 7,972
— 13,278
$— 21,250

$

T otal reserves ........................................ .$ 727,879
T otal deposits ........................................
693,526
F .R . notes in circulation.................... 1,077,048

$— 35,849
— 56,312
— 6,875

$ + 9 9 ,4 1 4
— 16,265
— 2,556

$ ...............

$—

Industrial com m itm ents under Sec
$

.........

.........

— 11,388
— 85,280
$— 96,668

580

PRIN CIPAL ASSETS AND LIA B IL IT IE S
W EE KLY REPORTING MEMBER BANKS
EIGHTH FEDERAL RESERVE DISTRICT
(In thousands of dollars)
34 banks reporting
June 15,
1949

ASSETS
Gross com m ercial, industrial, and
agricultural loans and open market

$ 476,883
Gross loans to brokers and dealers
in securities ......................................
Gross loans to others to purchase
Gross real estate loans.........................
Gross loans to banks...........................
Gross other loans (largely consumer

Certificates o f indebtedness................

$— *0,548

*

306

*

20,570
164,556
480

—
221
+ 1,172
— 4,125

*
»
*

206,660

—
289
— 44,317’
—
87
$— 44,230

«
*
*

5,579

874,728
Less reserve for losses................
N et total loans................................. $

Change from
June 16,
M ay 18,
1949
1948

9,683

865,045
47,732
199,022

47,680

—

+11,065
+26,297
— 2,182

U .S . bonds and guaranteed obliga749,802
O ther securities ....................................
138,498
T otal investments ........................... $1,182,734
794,158
Cash assets ............................................
25,987
O ther assets ..........................................
T otal assets ...................................... $2,867,924
L IA B IL IT IE S
Dem and deposits o f individuals,
partnerships, and corporations..... $1,482,982
551,299
Interbank deposits .............................
21,468
U .S . Government deposits..................
128,155
O ther deposits ......................................
T otal demand deposits.................... $2,183,904
487,550
T im e deposits ........................................
2,300
16,311
177,859
T otal capital accounts.........................
T otal liabilities and capital ac­
counts ............................................ $2,867,924

+ 1 1 ,9 3 5
+ 1,531

$+48,646
+ 3 8 ,6 0 5
+ 1,013
$ + 4 4 ,0 3 4

$+44,952
+ 1 1 ,9 5 1

— 11,787
+ 3,365
$+48,481
+
—
—
+

2,835
7,320
1,226
1,264

$ + 4 4 ,0 3 4

— $22,096
+ 3,245

+45,726

— 38,370

+44,498
— 6,643
$+48,456
+17,687
+
527
$+44,574
$+49,249
— 2,492
— 14,765
— 1,277
$ + 3 0 ,7 1 5
+ 1 2 ,8 7 0
— 4,200
+
144
+ 5,045
$ + 4 4 ,5 7 4

$ +5 6 ,7 0 1
$ + 2 0 ,5 9 7
Dem and deposits, adjusted**........... $1,373,601
* Comparative data not available due to change in m ethod o f reporting.
**O ther than interbank and governm ent demand deposits, less cash
items on hand or in process o f collection.

DEBITS TO DEPOSIT ACCOUNTS
M ay,
( I n thousands
1949
o f dollars)
21,619
E l D orado, A rk ....... $
F ort Smith, A rk .....
37,650
6,386
H elena, A rk .............
115,984
L ittle R o ck , A rk .....
21,853
Pine B lu ff, A rk ......
9,615
Texarkana, A rk .* ..
A lton , 111..................
20,826
E .S t.L .-N a t.S .Y .,Ill. 100,600
27,726
Q uincy, 111................
106,580
Evansville, In d .......
466,912
L ouisville, K y ..........
26,061
O w ensboro, K y .......
13,235
Paducah, K y ............
15,771
Greenville, M iss.......
9,814
Cape Girardeau, M o.
7,094
Hannibal, M o. ......
Jefferson City, M o.
51,387
St. L ouis, M o ......... 1,419,964
10,140
Sedalia, M o ...............
50,946
Springfield, M o .......
16,557
Jackson, T enn.........
448,055
M em phis, T enn.......

$

A pr.,
1949
20,670
39,890
7,034
118,345
26,397
9,806
23,083
101,672
28,710
109,488
458,718
26,978
13,414
18,457
10,486
7,560
58,178
1,413,310
9,883
52,519
16,799
466,450

M ay, M ay, ’ 49 com p, with
1948
A pr., ’ 49 M ay, *48
20,424 + 5 %
6%
+
8
34,759 — 6
4
6,626 — 9
— 2
118,055 — 2
— 2
22,236 — 17
3
9,291 — 2
17
25,049 — 10
—
2
102,267 — 1
— 2
28,174 — 3
5
101,227 — 3
+
3
453,794 + 2
7
27,984 — 3
—
7
14,172 — 1
—
1
15,922 — 15
—
5
10,317 — 6
—
1
7,131 — 6
43,906 — 12
+ 17
1
1,404,346 - 0 +
5
9,702
+
8
55,093 — 3
13
—
—
1
19,101
4
428,908 — 4
+

$

•These figures are for Texarkana, Arkansas only. T otal debits for banks
in Texarkana, Texas-Arkansas, including banks in the Eleventh D istrict,
amounted to $22,595.

volume has not been sufficient to effect an over-all
gain for the entire store. During 1948, sales of
the entire basement store accounted for slightly less
than one-fifth of total store volume.
The record of inventories by departments on
May 31 at St. Louis department stores shows that
more than half of the various divisions have inven­
tories smaller than as of the same date last year.
But the sharp declines from year-ago figures regis­
tered in many upstairs departments were offset
in others so that aggregate inventories averaged
only 2 per cent under those of May 31, 1948. Base­
ment department inventories also declined sharply
in some lines, reflecting higher sales demand here,
and in the aggregate totaled 13 per cent less than
for the comparable date last year.
For the district, inventories at department stores
on May 31 were 6 per cent less than on April 30
and 6 per cent under those on May 31, 1948. The
value of outstanding orders at the end of May (at
the lowest point on April 30 since August, 1942)
was down 3 per cent from the end of the previous
month and 35 per cent from May 31, 1948.
The composition of sales as to type of sale— cash
or credit— during May showed little change from
a year ago. In the month, cash sales accounted for
49 per cent of total sales, open credit sales 44
per cent and instalment sales 7 per cent. In May,
1944 and 1945 cash sales accounted for 61 per cent
of the total, open credit sales for 36 per cent and
instalment sales for 3 per cent. In May, 1941 (the
first year for which data are available) cash sales
constituted 43 per cent of total sales, open credit
sales 49 per cent and instalment sales 8 per cent.

reported gains of 10, 5 and 23 per cent, respectively,
over a year ago.
While gross loan volume was only $19 mil­
lion or 2 per cent under a year ago, there was a
marked change in the composition of the total.
Business and agricultural loans were $32 million
below mid-June, 1948, and loans on securities were
off $11 million. Real estate loans, however, were up
$17 million over a year ago and “ all other” (largely
consumer) loans were up $8 million.
The decline in business loans represented one
of the significant changes in banking in the first
half of the year. The contraction this year to midJune amounted to $150 million compared with $100
million in 1948, and less than $50 million in 1947
and 1946. The cumulative percentage decline from
the end of 1948 to mid-June, 1949 was 28 per cent;
in 1948 it was 18 per cent.
The decline in business loans has occurred mainly
at the city banks. According to latest reports from
banks in rural areas in this district, net total loans
were up $8 million in the first four months of the
year with no change during the month of May.
Larger banks registered loan declines totaling $127
million in the same five-month period. By way of
contrast, in the first five months of 1948, smaller
rural banks added $43 million to their loans and

BUSINESS AND AS m CULTURAL LOANS
8th

DISTRICT W tm Vf

M&LKMS
OF 0 O I U R S

fco&i........... .... .......... ...

&m$

&43't349

MtkLSOftS
O f DOLLARS

17

-"'"""T' 1m"' ■■""' \mm

BANKING
Total loan volume in Eighth District weekly
reporting banks dropped $44 million in the four
weeks to mid-June. Banks in all six of the largest
cities reported a reduction in volume. The latest
four weeks recorded the most pronounced decline
for any four-week period so far in 1949, and was
much sharper than the drop which took place in
the comparable four weeks of 1948 and 1947. For
the first time since 1942 loan volumes were below
the level of the previous year. This was due mainly
to the decrease at St. Louis banks, which at midJune had about $22 million less in loans than a year
ago (4 per cent). Louisville banks had $10 million
less (8 per cent) and East St. Louis-National
Stockyards, Illinois, banks were off $5 million (12
per cent). On the other hand, at mid-June this
year, Memphis, Evansville and Little Rock banks




A
1949

600

/

1948

0

.0

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f . ##
r

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600

^

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♦

S00

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1947

4m

400

Qtiftrttt

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Page 105

other member banks reduced their loans by $81
million.
The shrinkage in business loans at large city
banks and the smaller expansion of loans this spring
at country banks is attributed partly to more severe
screening of loan applications by bankers, but pri­
marily to lessened demand for credit. As business
activity decreases, as prices soften, and as a com­
petitive prewar marketing condition returns, the
experienced business operators find a relatively
smaller cash balance satisfactory and tend to reduce
their borrowing for inventories and to take on new
commitments less readily. T o some extent, too,
other financial institutions are making loans to
meet the intermediate credit needs of businesses,
some of which would otherwise have been supplied
by the banks.
During the past few weeks the decline in business
loans has become increasingly sharper by com­
parison with the patterns of 1948 and 1947 (see
chart).
Gross demand deposits at mid-June were $48
million above the level of mid-May. On June 15
only the Louisville weekly reporting banks had less
in demand deposits than on May 18. Demand
deposits of individuals, partnerships and corpora­
tions— the principal component of gross demand
deposits— were likewise above mid-May on June
15 in the 34 weekly reporting banks combined and
in each of the reporting centers except Louisville.
Deposit volumes decreased seasonally during the
last two weeks in May but regained more than
the two weeks’ loss in the first half of June. Com­
pared with a year ago demand deposits were up
$31 million, declining Government accounts par­
tially offsetting the $49 million gain in individual
AGRICULTURE
CASH FARM INCOME
(I n thousands A p r.,
o f dollars)
1949
Arkansas ....$ 29,093
Illin ois ...... 128,183
Indiana ...... 66,154
K entucky...... 20,854
M ississippi.... 25,496
M issouri .... 60,584
Tennessee .. 20,911
Totals ....$351,275

A p r., 19494 month total Jan. to
com pared with
M ar.,
A p r.,
1949
1948
1949
— 15% + 6 5 %
$ 151,348
— 7
— 3
541,995
— 7
— 15
269,121
— 8
— 7
171,127
— 35
+41
184,100
— 4
— 8
268,290
— 19
— 8
122,871
— 11% — 1 %
$1,708,852

Apr.
1949
compared with
1948
1947
+44%
4 -2 9 %
- 0 — 4
— 8
— 4
+ 9
— 19
+66
+66
— 3
— 5
— 7
— 13
+ 6%
- 0 -%

RECEIPTS AND SHIPMENTS AT NATIONAL STOCK YARDS
R eceipts
M ay, 1949
M a y,
com pared with
1949
A p r.,’ 49 M a y,’ 48
Cattle and calves 98,126 + 14% — 16%
H o g s ................... 247,433 —
3
+ 3
Sheep ................... 60,417 + 1 4 7
— 12
H orses .................
801 —
5
— 47
Totals ...............406,777 + 11% — 5 %

Page 106




_________ Shipments_________
M ay, 1949
M a y,
compared with
1949
A p r.,’ 49
M ay,’ 48
31,163 +
6 % — 36%
80,570 — 5
+ 8
38,522 + 2 3 0
+12
801 — 5
— 47
151,056 + 19%' — 5%

and business deposits. Time deposits continued to
expand in the four weeks to mid-June and were
about 3 per cent over a year ago.
The growth in deposit volume— time and demand
— over a year ago occurred, despite the net shrink­
age in loans, because of the increase in bank invest­
ments in Governments. Bond holdings increased
$44 million; note, certificate of indebtedness and
bill holdings increased $11 million. At the same
time, investments in other securities decreased
nearly $7 million. Total investments were greater
than a year ago at each of the six reporting centers.
AGRICULTURE

Crop conditions over the nation as of June 1
justified more optimism than on that date in any
of the last twelve years. Wheat production for
1949 was estimated at 1,336 million bushels, a
15-million bushel increase over the May 1 forecast.
If the June estimate for the wheat crop is realized,
the American farmer will harvest a crop 4 per cent
larger than that of 1948 and only 2 per cent smaller
than the record crop of 1947. Conditions also were
favorable for corn, tobacco and cotton production.
But some areas of the Eighth District did not
share in the favorable national picture. A con­
siderable part of Missouri by mid-June was still
too wet for planting, haying and cultivating. Some
corn had not yet been planted; other fields were
becoming grassy. On the other hand, in district
portions of Indiana and Illinois, where crop produc­
tion was being retarded by a lack of surface mois­
ture, rains during the second week of June were
most welcome. Crop conditions in Arkansas and
in district portions of Mississippi were generally
average or above through the first of June. After
that date excessive rains apparently resulted in
appreciable damage in some areas.
Agricultural prices declined 1.5 per cent during
the month ending May 15 to an index of 256
(1910-14=100), a new low since O P A decontrol.
This index was nearly 1 per cent under the previous
low point in February, 1949. The decline in prices
received was due to lower prices for most meat
animals, dairy products and truck crops. The prices
farmers paid declined 0.4 per cent to an index of
245. The net result was a drop in the ratio of
prices received to prices paid from 106 to 104 during
the month, the lowest since June, 1942.
Cash receipts from farm marketings for the first
six months of 1949 were nearly $12 billion, about 7
per cent less than in the first half of 1948. Receipts
from livestock and livestock products were $7.4
billion, 10 per cent less than a year earlier. Crop

receipts were $4.5 billion, 3 per cent more than
in 1948. Prices received for the crops averaged 15
per cent lower than in 1948, but larger total market­
ings more than offset the lower prices.
Farm mortgage debt in the United States in­
creased $226 million, or 5 per cent, during 1948.
This was more than double the $104 million in­
crease in 1947. Five district states exceeded the
national average in percentage increase: Arkansas,
9 per cent; Mississippi, 8 per cent; Tennessee, 7
per cent; Indiana and Kentucky, 6 per cent. Mis­
souri registered a gain of only 3 per cent, and a
fractional decline occurred in Illinois— the only dis­

trict state, and one of five in the nation, in which
there was a decline.
Outstanding debt in hands of government spon­
sored credit agencies declined during 1948, but
holdings of insurance companies, insured commer­
cial banks and individuals increased. The largest
dollar increase in outstanding loans ($129 million)
was made by individuals; life insurance companies
($99 million) were next. Holdings of farm loans by
insurance companies increased 11 per cent, however,
while those of individuals increased only 7 per cent.
Farm loans held by commercial banks increased
$54 million, or 7 per cent.

National Summary of Business Conditions
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM

Production at factories and mines declined fur­
ther in May and June. Construction activity in­
creased somewhat and employment in most other
lines was maintained. Prices of industrial com­
modities continued downward and prices of farm
products and foods declined in June following some
advance in May. Department store sales were
maintained at relatively high levels.
Industrial production—The Board’s seasonally
adjusted index of industrial production declined 5
points in May to 174 per cent of the 1935-39 average
and, according to present indications, may show a
similar decrease in June. The May decline reflected
mainly a further substantial reduction in activity in
industriies manufacturing durable goods. Output of
nondurable goods and of minerals, which earlier
had declined more than output of durable goods,
showed only slight decreases in May.
Activity in the iron and steel, machinery and
nonferrous metals industries showed marked de­
clines in May, reflecting a reduced volume of orders.
Steel production averaged 93 per cent of capacity
and since then has declined further to a scheduled
rate of 84 per cent of capacity during the week be­
ginning June 20, as compared with the peak of 103
in March.
Machinery production has declined
about one-fifth since the end of last year. Output
of passenger cars was temporarily curtailed in May
as a result of a major work stoppage, but by midJune increased to new record postwar rates. Activ­
ity in most other industries manufacturing durable
goods declined slightly in May.




Activity in the cotton and rayon industries de­
creased further. Output of wool textiles, however,
increased from the exceptionally low April rate,
which was about 40 per cent below peak postwar
levels. Cotton consumption in May was at the
lowest rate since 1939. Petroleum refining activity
showed a slight gain in May, and newsprint con­
sumption rose further to a new record rate. Activity
in most other nondurable goods industries showed
little change.
Minerals output was slightly smaller in May.
Activity at nonferrous metal mines was substan­
tially curtailed and iron ore output, after allow­
ance for seasonal changes, was slightly below the
exceptionally high April level. Crude petroleum
production showed little change. Coal output in­
creased somewhat in May, but has been curtailed
sharply in June.
Construction—Value of construction contracts
awarded, according to the F. W . Dodge Corpora­
tion, rose slightly in May reflecting further in­
creases in awards for public construction. Private
awards were slightly smaller than in April and
continued considerably below a year ago. The
number of new housing units started increased fur­
ther in May and was close to the peak level of
100,000 units a year ago, according to estimates of
the Department of Labor.
Distribution— Value of department store sales in
May showed little change from April, after allow­
ance is made for the usual seasonal fluctuation.
Sales in the first half of June were 7 per cent below
Page 107

the high level of the corresponding period in 1948,
reflecting in part lower retail prices for apparel and
housefurnishings.
Shipments of railroad freight declined in May and
early June, reflecting mainly a marked reduction in
loadings of miscellaneous products. Total carloadings, after allowance for seasonal changes, have de­
clined about 12 per cent since last autumn.
Commodity prices— The general level of whole­
sale commodity prices declined 2 per cent from the
middle of May to the third week of June. Meat
and livestock prices showed small net change, as
decreases in mid-June followed advances in the
latter part of May. Cash wheat prices declined
about 10 per cent as marketings of another large
crop commenced. Prices of industrial commodities,
especially textiles, paper, metals and building ma­
terials, continued downward from May to June.
In May retail prices of most groups of consumers’
goods were somewhat lower than in April. The
B.L.S. index for all items, including rents and other
services, was 169.2 as compared with 169.7 in April
and the recent low point of 169.0 in February.
Bank credit— Business loans at banks in leading




cities declined substantially during May and by
somewhat smaller amounts during the first half of
June. Real estate and consumer loans increased
slightly. Banks purchased about 2 billion dollars
of Government securities of both long and short
maturities, in part out of reserve funds released by
the reduction in reserve requirements effective in
early May.
Treasury expenditures were considerably greater
than receipts in the first half of June, and Treasury
deposits at the Reserve Banks declined substan­
tially. This supplied banks with reserve funds and
banks bought Government securities from the Fed­
eral Reserve System and increased their excess
reserve balances. Subsequently banks lost reserve
funds as Treasury balances at the Reserve Banks
were built up by quarterly income tax payments.
Reserve System holdings of Government bonds de­
clined further during June.
Security markets— Common stock prices de­
creased about 9 per cent, with a moderate volume of
trading, in the four weeks ended June 13 and re­
covered part of the decline in the following 10 days.
Prices of high-grade corporate bonds changed little.