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

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July 1955

Volume X X X V I I

Number 7

t Developments in Employment
Y the second quarter of 1955 economic activity in the nation and in
the district had reached record levels, but as the recovery went
on factory employment lagged behind production increases, and unem
ployment was above the lows of 1953, reflecting fuller utilization of
employees’ services and increased productivity.
B

In the Eighth District improvements in employment and employment
prospects were sufficient by May to remove the St. Louis area from
the surplus labor category, and the Evansville experience has been
similar. Three other district metropolitan areas, while experiencing
employment changes, were at no time during the recession classified
as having substantial labor surpluses. On the other hand, the supply
in the smaller labor markets of the district is still substantially in ex
cess of demand despite some recent improvements.
Over-all, district employment has improved, but the growing labor
supply and increasing productivity pose long-run problems.

V "

Fe d e ra l

R e s ef »*\V «
\
j

B a n k

Recent Developments in Emg

By the second quarter of 1955 economic activity
in the nation and in the district had reached
record levels, . . .
MID-1955, economic observers were speaking
of recovery from the 1953-1954 slump as an accom
plished fact. The business upswing which had begun
nine months earlier continued, and although some
analysts were concerned about possible soft spots in
the latter half of 1955, nearly everyone was agreed
that a vibrant prosperity would last for many months.
Preliminary figures showed clearly that a record
gross national product had been achieved in the sec
ond quarter of 1955. At an estimated seasonally ad
justed annual rate of $377 billion, nearly $7 billion
higher than the previous high achieved in the second
quarter o f 1953, GNP was up 6 per cent from the
trough rate of 1954.
The figures which measure changes in the physical
volume of industrial production were perhaps even
more impressive. The Federal Reserve Board’s sea
sonally adjusted Industrial Production Index in May
reached 138, an all-time high. Output of durable goods
had not quite reached 1953 highs, but that of nondur
able goods achieved a new peak in May; and virtually
all major categories of both durable and nondurable
output shared in the May gain. Over-all industrial
production was up 12 per cent from its 1954 low, non
durable production was up 10.5 per cent, and dura
bles output was up a spectacular 14 per cent from the
low of 1954.
Page 78

- . . hut as the recovery went on factory employment

lagged behind production increases, and
unemployment was above the lows of 1953, . . .
As the recovery went on, monthly figures showed a
sharp difference between the rates of increase in out
put and employment. Indeed, many commentators
were worried over the apparent lag of factory employ
ment behind production increases. The May esti-

EMPLOYMENT

AND

UNEMPLOYMENT

(ADJUSTED FOR SEASONAL VARIATION)
Millions Of Persons

Source: Employment- U.S. Bureou of Labor Statistics
Unemployment - US Bureau of Census

Millions Of Persons

mates dispelled some o f the concern. Between April
and May, employment in nonagricultural establish
ments (seasonally adjusted) increased some 300,000,
but was still a little below the July 1953 peak level.1
Manufacturing employment in May was up about 5.5
per cent from the seasonally adjusted low of August
1954. Between April and May, unemployment (sea
sonally adjusted) dropped to a level of 2.7 million.
At approximately 4 per cent of the civilian labor force,
the unemployment figure for May 1955 was a consid
erable improvement over the figure of a year ago.
However, unemployment so far this year has been
above the levels of the first half of 1953, when the
economy was at an earlier peak.

* * . reflecting fuller utilization of employees’

services and increased producthily.
The reversal o f a business downtrend is usually fol
lowed by a period of several months in which em
ployment gains lag behind production increases. In
part, this lag results from the fuller utilization of the
services o f employees who were not laid off during
the recession but who nevertheless had idle time on
their hands. Another reason for failure of employ
ment to rise with output is the lengthening of the
work week as recovery goes on. From mid-1954 to
May 1955, for example, the average factory work
week rose by over an hour, and in some industries the
increase was much more than this. In the automobile
industry, to take a single instance, the average work
week rose from just under 40 hours in September
1954 to 44 hours in March 1955. Finally, and with
more serious implications for particular labor mar
kets, employment increases may lag because of pro
ductivity increases in various industries, with a con
sequence that occupational shifts must take place to
correct the unemployment.
Whatever the future course of employment and un
employment in the aggregate may be, it is possible
to discern certain clearly defined patterns of recent
employment changes.2 It is axiomatic that the impact
of depression is always hardest on the durable goods
industries. It should be no surprise to learn, there
fore, that in the recent recession three-quarters of the
reduction in total employment was suffered by the
durable goods industries. It follows that those areas
in which the number employed in durable goods man
1 Census data, which include self-employed, unpaid family, and domestic
service workers, indicated a somewhat better performance in comparison with
previous peak levels. Total civilian employment, including agricultural work
ers, in May reached a high slightly above that of May 1953 and 1.6 million
above the May 1954 figure.
2 See Edmond L. Kanwit, "Patterns o f Recent Employment Changes—
Area and N ational,” Survey of Current Business, June 1955, pp. 15- 19.

ufacturing was a large per cent of nonagricultural
employment should show the greatest changes in
total employment during the recent recession. But
care must be taken to qualify this broad generaliza
tion. Areas enjoying a rapid growth were less affect
ed, whatever their type of production, than older,
slower growing areas. Nor were all the durable goods
industries affected equally. Moreover, for a number
of reasons, employment changes within a particular
industry varied greatly from community to commu
nity.
The swings that took place nationally between mid1953 and mid-1955 in employment and unemploy
ment were evident in the Eighth District. Likewise,
differences in the impact of employment change be
tween areas are clearly discernible in the major met
ropolitan areas of the district.

In the Eighth District improvements in employment and
employment prospects were sufficient by May to
remove the St. Louis area from the surplus
labor category, . . .
As production in the industrial centers of the dis
trict expanded in 1952 and the first part of 1953, the
increased job opportunities attracted people into the
local labor markets. Women, older workers and
school-age workers were drawn into the labor force.
People migrated from a wide area to St. Louis to take
jobs with higher pay than at their previous homes.
But even at the peak o f activity, the supply of labor
was approximately in balance with demand. Unem
ployment was estimated at about 21,000 in May 1953,
approximately 2.5 per cent of the local labor force.3
After the close of the Korean War, defense pro
duction was reduced and substantial layoffs occurred
at ordnance, aircraft and aircraft parts plants, and
steel foundries producing tank castings. In addition,
other manufacturing activity declined, reflecting the
shift from inventory accumulation to liquidation and
the reduction in demand for producers' and consum
ers’ durable goods. With the decline in manufactur
ing activity, railroad carloadings and employment in
transportation fell off.
Coincident with the reduction in St. Louis manu
facturing activity caused by economic forces and Gov
ernmental decisions which affected most areas of the
nation in varying degrees, some large manufacturing
and warehousing operations were closed permanently
or transferred to other areas. Most of the closings
were shoe manufacturing operations, which were
3 Unemployment figures used in this article for Eighth District areas are
those supplied by the State Employment Security offices.

Page 79

transferred to more efficient or lower cost locations
in towns around St. Louis. Some apparel manufac
turing operations have also been transferred from the
metropolitan area, A large candy plant, a large ma
chinery producer, two large warehouse operations,
and several smaller distributors and producers shut
down and transferred their activities elsewhere. In
the past two years employment for an estimated 3,500
persons was lost through closings or transfers.
At the same time that the loss o f employment
opportunities from closings and transfers occurred,
new jobs were created as new operations were opened
in the area, A large automobile frame plant was es
tablished, and many other smaller activities were set
up. But, on balance, more employment was lost than
gained.
With the decline in employment in the last part of
1953 and during most of 1954, the persons most
recently hired tended to be the first laid off. Many
of the unemployed withdrew from the labor force or
returned to their previous homes. Where there were
other breadwinners in the family, many of the women
laid off withdrew from the labor market at least tem
porarily.
The drop in employment, however, outran the re
duction in the labor force, and unemployment rose in
the latter part of 1953 to reach substantial levels in
1954. By May 1954 unemployment increased to more
than 6 per cent of the labor force, and St. Louis was
classified as an area of substantial labor surplus by
the United States Bureau of Employment Security.
Unemployment increased to 63,000 or 7 per cent of
the labor force in July 1954. Later in the year un
employment declined somewhat, reflecting both sea
sonal trends and some expansion of job opportunities.
The St. Louis labor market continued to improve
steadily from January through May 1955. By that
time unemployment had dropped to 44,000 or 5 per
cent o f the labor force, a figure substantially less than
the 56,000 estimated unemployed in May 1954 but
about twice the number of two years earlier. Shortly
thereafter the area was removed from the labor sur
plus category.

In a d d itio n , co n stru ctio n a c tiv ity has been m ain
tain e d a t a h ig h le v e l.
St. Louis furnishes a good example of how an area
may become especially vulnerable to swings in em
ployment as it becomes a center of durable goods
manufacture, including ordnance production. Be
tween mid-1952 and the late summer of 1953, St.
Louis area employment in durable goods manufac
ture rose sharply; by July of 1953 nearly 25 per cent
of total nonagricultural employment in the St. Louis
area was accounted for by durable goods manufac
turing. The subsequent percentage decline in non
agricultural employment was sharp, and at a greater
rate in the Illinois portion of the St. Louis metropol-.
itan area than in the Missouri portion, reflecting the
concentration in the Illinois sector of primary metals
manufacturing which suffered substantial cutbacks.
In July 1954, unemployment in the Illinois portion
was estimated at 10.8 per cent of the labor force com
pared with 7.4 per cent for the metropolitan area as
a whole. W hile unemployment in the Illinois section
has declined in recent months, the rate was still high
er than for the entire area in May 1955.
. . . and the Evansville experience has been similar.

Evansville, too, has experienced large swings in
employment primarily as a result of the concentration
of its economic activity in durable goods production
(refrigerators, automobiles, fabricated metal products

ESTIMATED

MANUFACTURING

EMPLOYMENT IN FIVE

DISTRICT METROPOLITAN

St. Louis, Louisville, Memphis, Evansville and Little Rock
Thousands

In May 1955 total nonagricultural employment in
the St. Louis metropolitan area was estimated at
700,000 persons, not including an estimated 3,000 per
sons involved in labor-management disputes. This
was virtually the same as a year earlier although
about 40,000 less than in May 1953.
The main strength in the St. Louis economy in re
cent months has been the increased production of
automobiles and primary metals, which has more
than offset some further decline in ordnance output.
Page 80

AREAS

So u rce:

State Employment Security Divisions

and furniture). From May 1952 to May 1953 em
ployment in nonagricultural establishments there
jumped 10,900, or 16 per cent, to 77,200 persons.
Most of this increase was in manufacturing, as re
frigerator and automobile production increased after
restriction in 1952 by defense controls. As in St. Louis,
many of the workers added in the 1952-1953 boom
came from the surrounding region. Some preferred to
commute from nearby to their new jobs in Evansville.
By May 1953 unemployment in the area was reduced
to 2,000 persons, or 2 per cent of the labor force. At
that time, the local labor supply was classified by
the Bureau of Employment Security as being in ap
proximate balance with demand.
Between May 1953 and May 1954 total employment
dropped 15,300, or 17 per cent, to 66,300, reflecting
among other things output curtailment of military
aircraft components and reduced production of au
tomobiles and refrigerators. Many of those laid off
withdrew from the local labor market. But unem
ployment rose substantially and by May 1954 was es
timated at 7,200 or 9 per cent of the labor force. With
unemployment in excess of 6 per cent, the area was
classified as having a substantial labor surplus.
In the period from May 1954 to May 1955 the
downtrend was reversed. Employment increased
moderately, largely because substantial gains at auto
mobile plants more than offset further reductions in
production o f aircraft components. In addition, em
ployment in construction and trade rose slightly.
Total employment in nonagricultural establishments
reached 69,800, an increase of 3,500, or 5 per cent, in
the year ending May 1955. W ith the moderate in
crease in employment and no net addition to the labor
force, unemployment declined to 5 per cent of the
labor supply in May 1955, an improvement sufficient
to remove the area from the substantial labor surplus
category.
Three other district metropolitan areas, while
experiencing employment changes, were at no time
during the recession classified as haring
substantial labor surpluses.
Changes in Louisville employment roughly par
alleled the national trends, reaching a peak in 1953,
declining in the latter part of that year and through
much of 1954, and recovering some of the lost ground
by May 1955. Unemployment in May 1955 was a
little higher than two years ago, although well below
the levels existing in most of 1954 .
Employment was at a peak of 237,500 in July 1953,
consequent upon stepped-up production at the
Indiana Arsenal and other defense plants, continued

EMPLOYMENT
IN NONAGRICULTURAL ESTABLISHMENTS
(in thousands)
Metropolitan Area

St. Louis....................... ............
Louisville.................... ............
Memphis....................... ............
Evansville. ................... ............
Little R ock.................. ............

May
1953

May
1954

May
1955

741.4
234.2
171.0
81.5
69.2

701.5
218.2
169.6
66.4
67.5

699.9*
226.7*
167.2*
69.8
69.5

May
1953

May
1954

May
1955

21.1
7.0
10.6
2.0
3.2

55.7
17.6
13.8
7.2
5.2

43.8
11.4
12.9
3.8
3.6

♦Reduced by strikes

Unemployment
(in thousands)
Metropolitan Area

St. Louis....................... ............
Louisville....................... ..........
Evansville..................... ............
Little Rock.................. ............
Source: State Employment Security Divisions

hiring at the new General Electric Appliance Park
plant and high levels of activity in most other lines.
Even when employment was at its peak the supply
of labor was considered approximately in balance
with demand, rather than tight.4 Unemployment was
estimated at 7,000 and furthermore the local labor
supply was being augmented by in-migration from
the surrounding region.
After mid-1953 employment turned downward
when production at the Indiana Arsenal and other
defense plants was reduced. In addition, the demand
for farm equipment declined, and employment in the
manufacture of tractors was reduced substantially.
Employment at Appliance Park, however, continued
to increase throughout 1953 and 1954. Total non
agricultural employment declined 20,000 or about 8
per cent from the peak in 1953 through March 1954.
As elsewhere, many of those laid off either withdrew
from the labor force or returned to their homes out
side the Louisville area. Unemployment increased
substantially and in May 1954 was estimated at
17,600 persons.
In the past year large increases in farm machinery
production and automobile assembly, combined with
continued expansion of electric appliance manufac
turing, have brought manufacturing employment to
levels close to the 1953 peak. Total nonfarm employ
ment has also increased, but the 227,000 employed in
May 1955 was still about 7,000 less than two years
4 Area Classification Summary, United States Bureau of Employment Secur
ity, July 1953.

Page 81

earlier. Accompanying the rise in employment, the
number of unemployed declined from 17,600 in May
1954 to 11,400 in May 1955.
In contrast to the patterns of employment change
in St. Louis, Louisville and Evansville, employment
in Memphis fluctuated little in the past three years
and has not increased during the past year. Total
nonfarm employment rose by only 2,400 or 1.4 per
cent from May 1952 to May 1953, when most other
cities were experiencing substantial gains and national
nonfarm employment increased 3.8 per cent. In the
year ending May 1954 employment in Memphis de
clined by only 1,400, or 1 per cent, while employment
declined 3 per cent nationally. In May 1955 Memphis
employment was slightly less than a year earlier.
The supply of labor in Memphis moderately ex
ceeded labor requirements in 1952. With only small
employment increases in 1953, demand never pressed
hard upon supply, and the labor market classifica
tion remained unchanged. Likewise, with only minor
declines in employment in the past two years, the
supply of labor continued to exceed demand only
moderately.
Employment changes in Little Rock in the past
two years have also been moderate. After declin
ing slightly from 1953 to 1954, employment in nonagricultural establishments increased by May 1955
to equal the level of two years earlier. In contrast,
employment in the larger district metropolitan areas
was still below the level of two years ago.
Defense production cutbacks and slackened furni
ture output reduced employment in the year from
May 1953 to May 1954. In the year ending May 1955,
manufacturing employment declined, although it was
higher than at any other time in the intervening
twelve months. Most of the loss in manufacturing
was in metal products and apparel plants, offset in
part by a small gain in lumber and w ood products
plants. Increased construction activity, largely ac
counted for by the building of a $75 million air base
in the Little Rock area, was chiefly responsible for
an increase of 2,300 in nonmanufacturing employ
ment from May 1954 to May 1955.

the past several years, and other types of activity
have not increased sufficiently to absorb the labor
released from the mines. As a result, pools of unem
ployment have formed. This problem has been es
pecially severe in the Herrin-Murphysboro-West
Frankfort, Illinois, Madisonville, Kentucky, and Vin
cennes, Indiana, areas.
During 1953, employment in the coal mines in the
Herrin-Murphysboro-West Frankfort area continued
to decline and more than offset moderate increases
in manufacturing employment. In the first half of
1953, unemployment was estimated at 11,800, some
19 per cent of the labor force. In the last half of
1953, employment dropped by nearly 5,000, reflect
ing curtailment of defense production in the area, re
ductions in some other types of manufacturing ac
tivity following lower demands and further losses
in coal mining employment. Unemployment, which
had been augmented by the return of residents from
employment in the larger metropolitan areas, was
estimated at 15,700, approximately 25 per cent of
the labor force in February 1954. Throughout 1954
construction and manufacturing employment in
creased slightly, but employment at coal mines con
tinued to ebb. By February 1955, the civilian labor
force was reduced somewhat by out-migration and
enlistments in the armed forces. Total employment,
however, was virtually unchanged and unemploy
ment at approximately 22 per cent of the labor force
was only slightly lower than a year earlier.

EMPLOYMENT AND HOURS
IN ILLINOIS COAL M INES
Employment in Thousands

Hours per week

Despite the favorable employment experience in
Little Rock, the supply of labor has moderately ex
ceeded requirements from March 1953 to date.
On the other hand, the supply in the smaller labor
markets of the district is still substantially in excess
of demand despite some recent improvements.
Declining coal production in the district, com
bined with increased efficiency of operations, has re
duced the demand for coal miners substantially over
Page 82

Source;

Illin ois

State

Employm ent

Service

Declining employment in the coal mines in Knox
County (Vincennes) also has been responsible for
most of the unemployment in that area. For ex
ample, in May 1950 coal mines in the area employed
1,500 workers; by May 1955 only 360 were at work,
and those employed were working only three or
four days each week. Manufacturing employment
has also declined in the area over the past two years,
offsetting a previous increase of approximately 400
in the period May 1952 to May 1953. From mid1953 to mid-1954 employment in electrical equip
ment manufacturing declined by about 20 per cent,
and a food processing plant was closed in early 1954.
The area has continued to be classified as one of
very substantial labor surplus.
With the downturn of employment in the last part
of 1953 and continuing through the first half of 1954,
other smaller areas in the Eighth Federal Reserve
District experienced declines in employment. In ad
dition, workers who had left the areas to seek em
ployment in the larger industrial centers in the na
tion returned to their previous homes despite the
lack of job opportunities there.
In the Litchfield, Illinois, area a large drop in coal
mining over the two-year period ending in March
1954, combined with sizable layoffs from manufac
turing establishments, caused unemployment to reach
very substantial levels by March 1954. The closing
of a primary metal plant and layoffs following term
ination of defense contracts at a fabricated metal
products plant more than offset gains in the local
stone, clay and glass industry. In the past year
further decreases in employment occurred.
The closing of a large railroad car manufacturing
plant in Mount Vernon, Illinois, in early 1954 caused
unemployment to reach very substantial levels by
April of that year. During the next twelve months,
employment increased slightly. Reflecting this gain
and out-migration, unemployment declined some
what, but the area continued in the substantial labor
surplus category in May 1955.
In January 1954, Texarkana, Texas-Arkansas, was
classified as having a substantial labor surplus be
cause of the sizable reductions in employment at two
large ordnance establishments in the area. In March
1954, Henderson, Kentucky was designated an area
of very substantial labor surplus as a result of the
closing of Camp Breckenridge, which more than off
set an increase of about one-third in coal mining em
ployment there. Also a large number of the unem
ployed had recently been laid off from jobs in near
by Evansville. The Frankfort, Kentucky, area was
classified as one of substantial labor surplus in May

1954. Manufacturing and nonmanufacturing employ
ment declined markedly during the previous year.
Unemployment rose to about 8 per cent of the labor
force as a result of layoffs at distilleries, apparel,
leather products and fabricated metals plants. Con
struction employment also fell sharply. In the Harris
burg, Illinois, area, coal and fluorspar mines released
about 600 workers and trade establishments laid off
300 during the first three quarters of 1954. As a re
sult, unemployment rose to 15 per cent of the labor
force in October 1954. Part of the rise in unemploy
ment was occasioned by the return of local residents
after layoffs from jobs in other areas. Declines in
food processing, electrical machinery, petroleum re
fining and construction in the Mount Carmel-Olney,
Illinois, area, caused unemployment to rise substanti
ally in late 1954. Closing of a garment plant, reduc
tions of electrical equipment output, and reduced oil
exploration and drilling also added to the number of
jobless there. By December 1954 unemployment was
estimated at 8 per cent of the labor force. As of
May 1955, these five areas were classified as having
substantial labor surpluses by the United States Bu
reau of Employment Security.
In Owensboro, Kentucky, layoffs from Evansville
plants swelled the local unemployment rolls in early
1954. In addition, employment in electrical machin
ery and furniture industries was cut back and factory
employment dropped by about 1,400 in the year end
ing April 1954. Unemployment rose to nearly 12
per cent of the labor force in that month and con
tinued to stay at relatively high levels through May
1955.
In July 1954, Fort Smith, Arkansas, was classified
as having a substantial labor surplus because of
employment declines at a zinc smelter and at glass
and food processing plants. Mining, construction and
government employment also dropped. As a result,
unemployment rose to about 8 per cent of the labor
force in June 1954. Operations were subsequently
resumed in zinc smelting. Furniture production,
which bulks large in Fort Smith industry, continued
at a high rate, and construction employment in
creased. Coal mining, however, remained at a low
level. In May 1955 the area was still classified in the
substantial labor surplus category.
Unemployment in the Springfield, Missouri, area
rose above the 6 per cent mark in late 1953 and re
mained at relatively high levels until May 1955.
Thus, notwithstanding the fact that employment has
shown some increase during the past two years, pri
marily as a result of the expansion of construction
and trade activity, the latest data available indicate
that unemployment was slightly less than 6 per cent
Page 83

between September 1954 and May 1955. The return
of prosperity should not, however, make us carelessly
optimistic about future employment problems. An
nual additions to the labor force mean that out
put should increase aside from improvement in pro
ductivity (assuming little change in the work week).
And the evidence is clear that annual increases in
productivity over the past few years have been siz
able.

and Springfield was still listed as an area of sub
stantial -labor surplus in May 1955.
O ver-all, district em ploym ent has improved, but the
growing labor supply and increasing productivity
pose long-run problem s.

The persistence of large numbers of jobless in the
smaller labor markets suggest that there is in the
Eighth District a certain amount of “hard-core” un
employment. The mining and transportation indus
tries have experienced employment declines for sev
eral years now, and the older workers in these in
dustries have had difficulty in finding new jobs. The
correction of this type of unemployment comes about
only as the slow and painful process of resource
transfer works itself out.

Maximum utilization of our resources may thus be
expected to result in further increases in output of
goods and services. If recurring spells of unemploy
ment are to be mild and short-lived, Americans must
have incomes high enough to enable them to take
from the market, at prices profitable to producers,
the output which fully utilized resources will pro
duce. The recently achieved record rate of national
income is encouraging.

Elsewhere in the Eighth District temporary prob
lems of unemployment have more readily resolved
themselves as over-all economic activity picked up

W il l ia m

H . K ester

NEW MEMBER BANKS
Three banks located within the territory of the Eighth Federal Reserve District became
members of the Federal Reserve System during the first half of 1955.
The First National Bank of Altheimer, Altheimer,

The German American Bank, Jasper, Indiana, be
came a member bank on January 18. The bank’s
officers are:

Arkansas, became a member of the System on April
20.

President
P. L. K r o d e l , Vice President
O. L e o B e c k m a n , Cashier, Secretary and Trust Officer
H e r b e r t S. G r a b e m a n , Assistant Cashier
A n d r e w A . K n i e s , Assistant Cashier
Louis J.

Its officers are:

E c k s t e in ,

C h arles
R.

C . W il l e y ,

B a r n e t t , J r .,

R alph

Ju s t i c e ,

President

Vice President
Cashier

The Farmers State Bank of Sullivan, Sullivan, In
diana, became a member bank as of June 9. Officers
announced officially by this bank, which plans to
open in August, are:
J.

C row der,

President

W m . H . C row der,

Vice President and Acting Cashier

A D D IT IO N S TO THE PAR LIST

The following banks, located in the Eighth Federal Reserve District, were added to the Par List
during the first six months of this year:
Arkansas
Bank of West Memphis
West Memphis, Arkansas
Merchants and Planters Bank
West Memphis, Arkansas

Page Si.

Mississippi
Merchants & Farmers Bank
Kosciusko, Mississippi
Ethel Office, Branch of
Merchants & Farmers Bank of
Kosciusko
Ethel, Mississippi

Sallis Office, Branch of
Merchants & Farmers Bank of
Kosciusko
Sallis, Mississippi
Weir Office, Branch of
Merchants & Farmers Bank of
Kosciusko
Weir, Mississippi

Missouri
Bank of Gainesville
Gainesville, Missouri
Tennessee
Rossville Savings Bank
Rossville, Tennessee

OF CURRENT CO N DITIO N S
District business activity in June held close to
peak levels .

B u s i n e s s ACTIVITY in the Eighth Federal
Reserve District held close during June to the peak
levels reached in May. Production of steel and auto
mobiles declined slightly, and department store sales
showed little change. At the same time construction
activity continued at a fast pace and the demand for
bank loans remained strong. Insured unemployment
fell, but the labor markets were flooded with June
graduates and vacation job-seekers. Prices of major
district farm products rose somewhat.
The rise in the nation’s business activity in recent
months has taken the economy to new peaks. The
gross national product for the second quarter was
about 2 per cent larger than the previous peak of
two years earlier.
Industrial production in May
reached a new record after seasonal adjustment of
138 per cent of the 1947-49 average. Outlays for
total new construction in May, seasonally adjusted,
were at a record annual rate of $42 billion, or nearly
$5 billion more than during all of 1954. The rise
in business activity has been accompanied by im
provement in the labor markets. Employment in
mid-May was 700,000 higher than the previous May
record reached in 1953. Unemployment fell to 2.5
million, the lowest level since 1953. Personal income
has also reached record levels. With higher income
augmented by substantial use of credit, consumers
purchased goods in record volume in April and May,
after allowance for seasonal trends.
Two important sectors of the national economy
have reversed their previous rise. Automobile pro
duction was cut in June by work stoppages and to
allow dealers to reduce their stocks of new cars. Resi
dential construction contracts awarded declined from
April to May and continued downward in the first
half of June.
Nevertheless, the outlook for the rest of the year
appeared favorable. With high and expanding in
come, consumer demand may well increase further.

Rising capital outlays are planned by business for
the third quarter. State and local governments face
a large backlog of needed public work and probably
will continue to expand their outlays. Moreover, the
supply of labor appears to be ample to accommodate
further increases in business activity.

Production o f some major industries declined
Steel poured from St. Louis area mills at full
capacity rates in June in order to meet strong demands
of district customers, especially for flat rolled prod
ucts. However, this was down slightly from May
when mills had operated at 106 per cent of rated ca
pacity. Construction, natural gas pipelining, and in
creased manufacture of appliances and machinery
accounted for much of the demand. Automobile
assembly at district plants also lessened during June,
due to interruptions by sporadic work stoppages and,
toward the end of the month, reduced schedules as
the close of the 1955 model season approached. Lum
ber output remained about the same, on balance,
with mills operating at a higher rate than in 1954.
Crude oil production in the first half of June was up
3 per cent from its rate in the corresponding weeks
of May and was 14 per cent higher than a year ear
lier. Coal production continued to hold up well. The
shoe production outlook for the district was bright
ened by an announcement of International Shoe Com
pany that it would step up production activity in this
area to meet an anticipated increase in fall sales and
as a result of an expansion of facilities in the Midwest.
Shoe manufacturers generally are optimistic as to the
fall season, according to trade reports.

Department store sales show ed little change .
Sales at reporting district department stores in the
first four weeks of June were about the same as in
May, after allowance for seasonal factors. They lagged
behind those of June 1954 when extremely hot weath
er aided sales of seasonal merchandise. Sales of new
automobiles continued at a relatively high level, but
the pace showed signs of slackening. Used car sales
were somewhat higher than a year ago.
Page 85

During May, district department store sales
dropped contra-seasonally from April, but were con
siderably above those in May 1954. After allowance
for seasonal factors, the adjusted index of daily
average sales dropped from 122 per cent in April
to 121 per cent in May. It was at 106 per cent of
the 1947-49 average in May 1954. Cumulative vol
ume for the first five months of 1955 was 7 per cent
above that in the like period of 1954.
In the St. Louis area, there were indications of
revived consumer interest in the apparel lines. After
running at about the same level in the first four
months as in 1954, sales of women’s and misses'
ready-to-wear apparel and accessories and in mens
and boys’ wear divisions recorded substantial in
creases over those in May 1954. Volume in the
homefurnishings divisions continued at a level con
siderably above that a year ago in those departments
where selling prices have been reduced to meet
competition.
At reporting furniture stores in the district, sales
during May were larger than in April and in May
1954.
The retail value of inventories held by reporting
department stores and by furniture stores on May 31
for the district as a whole was not much changed
from that a month earlier or on the like date of 1954.
Outstanding orders, however, were considerably
larger than on April 30 or a year earlier.

Construction contract awards remained high . . .
Total contract awards for new construction in the
first half of June in the St. Louis territory of F. W .
D odge Corporation, which includes most but not all
of the Eighth District, were at a higher rate than in
May or the same period of 1954. For the June period,
however, residential awards were made at about the
same rate as in May.
After allowance for seasonal change, the value of
residential contracts awarded in the district has de
clined in recent months from the extraordinarily high
peak reached earlier in the year. The index of district
residential contracts awarded ( seasonally adjusted,
three month moving average centered on middle
month) declined from 419 per cent of the 1947-49
average in January to 273 per cent for April.
. . , and the demand for bank loans strong.
The demand for bank loans continued strong at
district weekly reporting member banks during the
five weeks ended June 22. A large part of the bor
Page 86

rowing was to finance real estate purchases and con
sumer buying. Real estate loans rose substantially
more than in the corresponding periods of recent
years. The increase in "other”, largely consumer,
loans was $14 million or 3 per cent in the period
and 8 per cent for the year to June 22. By compari
son, these loans contracted slightly in the first five
and a half months last year, and rose 6 per cent in
the like period of 1953, when the demand for con
sumer credit was stimulated by a high level of
business activity and by easier credit terms follow
ing the removal of Regulation W. The recent gain
was primarily in automobile instalment paper.
Businesses made seasonal net repayments during
the five weeks ending June 22. However, cumulative
net repayments by commercial and industrial firms
since the beginning of the year were less than 60
per cent of the average for comparable periods of
the three previous years.
The average interest rate charged on short-term
business loans made during the first half of June 1955
at four reporting banks in St. Louis was 3.39 per cent.
During the corresponding periods in March 1955 and
June 1954 the rates were 3.37 and 3.45 respectively.
Another indication of the accelerated pace of eco
nomic activity was the larger dollar amount of check
payments during recent months. Debits to demand
deposits of individuals, businesses and local govern
ments at the 22 reporting centers in the district were
8 per cent greater in March, April and May than dur
ing the corresponding months of both 1954 and 1953.
The increase was shared by most reporting centers
with the largest gains percentagewise at Owensboro,
Kentucky and Springfield, Missouri. Preliminary indi
cations for June, based on clearings at the St. Louis
banks and the number of checks handled by this Fed
eral Reserve Bank indicate that the volume of check
payments continued large.

The supply of labor was still ample despite
improvement in some areas.
Rising business activity brought improvement in
the principal labor markets of the district, but unem
ployment was still larger than in 1953 and in June
the supply of labor was increased by the new grad
uates.
Insured unemployment in St. Louis, Louisville,
Memphis, Evansville, and Little Rock was from 5 to
15 per cent lower in early June than a month before
and was much lower than a year earlier.
Graduates and school-aged youngsters flooded the
labor markets in June. For the graduates there were

more jobs at higher pay than last year. Temporary
jobs for the vacation period were reported to be hard
to find, however.
Improvement in the labor markets of the St. Louis
and Evansville metropolitan areas between March
and May was sufficient to remove them from the sub
stantial labor surplus category. As of May, all five of
the district's largest metropolitan areas were classified
by the U. S. Bureau of Employment Security as hav
ing unemployment between 3 and 6 per cent of the
total labor force, with no significant increase in non
farm employment expected for the next four months.
Fourteen smaller areas o f the district, which are not
included in those regularly surveyed, were still listed
as having substantial labor surpluses in May.*

Growing conditions were favorable for district
crops.
Farmers in the district were heartened by generally
favorable growing conditions during June and some
what higher prices for their products than in May.
Still, farm income in the district in the first four
months was off 8 per cent from the level of the cor
responding period last year. And reduced acreages
•Fort Smith, Arkansas; Texarkana, Arkansas-Texas; Springfield, Missouri;
Greenville, Mississippi; Frankfort, Kentucky; Owensboro, Kentucky; Hen
derson, Kentucky; Madisonville, Kentucky; Mt. Carmel-Olney, Illinois; Har
risburg, Illin ois; Herrin-Murp>hysboro-west Frankfort, Illin ois; Litchfield,
Illin ois; Mount Vernon, Illin ois; Vincennes, Indiana.

of the high income crops and the outlook for lower
livestock prices when the spring pig crop (9 per cent
larger than in 1954) is marketed offered little hope
for improvement.
As of June 1, indicated wheat production in dis
trict states was 6 per cent less than in 1954. Most of
the cut was due to acreage restriction, as yields per
acre were only slightly less than last year. Tobacco
and rice acreages harvested in district states are ex
pected to drop 25 per cent and cotton by 15 per cent
from last year.
Prices paid district farmers during June for meats
and livestock products rose more than seasonally de
spite large marketings. The index of prices of the
district's major agricultural products averaged 1 per
cent higher than in May, largely as a consequence of
10 per cent higher average hog prices in June and
relative stability in other major district farm com
modity prices.
Rainfall at major weather reporting stations in the
district during May and June varied from near nor
mal to twice normal, compared with a generally se
vere deficiency during the same period a year ago.
As a result, pasture and hay conditions in district
states on June 1 were generally near or slightly above
normal and approximately 10 per cent more favor
able than they were a year ago.

(Mvamsi dfaka&si dumlaJbk
A limited number of advance copies of the Survey of Current Condi
tions will henceforth be released on the first of the month, several days
before the printed copies of the Monthly Review are ready for mailing.
If you are interested in receiving one of these advance copies, please notify:
Research Department
Federal Reserve Bank of St. Louis
411 Locust St.
St. Louis 2, Mo.

Page 87

wwM'

'O utniet

V A R IO U S IN D IC A T O R S OF INDUSTRIAL ACTIVITY

ggV

Industrial Use of Electric Power (thousands o f K W H per w orking day, selected
industrial firms in 6 district citie s)........................................................................................
Steel Ingot Rate, St. Louis area (operating rate, per cent o f ca p a city )........................
C oal Production Index— 8th Dist. (Seasonally adjusted, 1 9 3 5 - 1 9 3 9 = 1 0 0 ) ............
Crude Oil Production— 8th Dist. (D aily average in thousands o f b b ls .)....................
Freight Interchanges at RRs— St. Louis. (Thousands o f cars— 25 railroadsTerminal R. R. A ssn .)..............................................................................................................
Livestock Slaughter— St. Louis area. (Thousands o f head— w eekly average)
.
Lum ber Production— S. Pine (Average w eekly production— thousands o f bd. f t . ) .
Lum ber Production— S. Hardwoods. (Operating rate, per cent o f ca p a city )............

M ay 1955
com pared with*
Apr. 1955
M ay 1954

+ 2%

13,919
’ /v"
106
128 p
3 63 .5

+ 12 %
+ 49
+ 23

+ 9
— 35
+ 2

+11

112.2

+ 2
+ 9
9 2.8
— 5
218 .3
+ 5
+ 17
90
+ 2
+ 1
* Percentage change figures for the steel ingot rate, Southern hardw ood rate, and the coal production index, show the
relative per cent change in production, not the drop in index points or in percents o f capacity.
p Preliminary.

BA NK DEBITS1
M ay
1955
(In
m illions)
Six Largest Centers:
East St. Louis—
N ational Stock Yards,
111.....................................
Evansville, Ind. ..........
Little R ock, Ark...........
L ouisville, K y................
Mem phis, Tenn.
St. Louis, M o ..............
T otal— Six Largest
Centers ....................

T otal— 2 2 Centers

124.7
170.2
188.9
785.8
678.5
2,200.1

$4,1 48 .2

Other Reporting Centers:
A lton, 111..........................
$
35.9
C ape Girardeau, M o.
14.4
El D orado, Ark............
31.0
Fort Smith, Ark. . . .
52.5
Greenville, Miss............
26.8
H annibal, M o ................
9.5
H elena, A rk...................
8.0
Jackson, T en n ................
23.2
Jefferson City, M o. . .
69.6
O w ensboro, Ky..............
41.8
Paducah, Ky. ...............
26.9
Pine Bluff, Ark..............
29.7
Quincy, 111......................
39.9
Sedalia, M o ...................
14.6
Springfield, M o..............
89.6
Texarkana, Ark............ ..............18.9
Total— Other
Centers ....................

CASH FARM IN C O M E
M ay, 1955
com pared with
Apr.
May
1954
1955

+20

7
5

+17%

Apr.
1955

Arkansas . $ 3 3,2 08 + 6 1 %
Illin ois. . . .
122,225 — 16
Ind ia n a . . .
7 4 ,4 9 6 — 9
Kentucky. .
2 0 ,9 94 — 2
Mississippi
2 2 ,4 49 + 3 4
Missouri. . .
7 0,3 59
-0 Tennessee
20,8 82 + 3
7 States. . . . $ 36 4 ,6 1 3 —
8 th District. $ 1 5 9 ,2 0 3 +

3
7

— 6
— 1
+ 24
— 6
— 2
— 3

—
—
—
—

11
10
10
12

—
—

9
7

—
—

—

— 12

+ 10
+ 10
+21

+ 13
— 15
— 5
+ 18
+ 15
+ 38
— 9

— 11

±
3
+ 19
+ 1
-0 -%

+14%
-1 7 %

i Debits to dem and deposit accounts o f individuals,
partnerships and corporations and states and political
subdivisions.

(In Millions o f Dollars)
Assets
Loans! .........................................
Business and Agricultural .
Security ..................................
Real Estate ...........................
Other (largely consumer) .
U. S. Government Securities
Other Securities ......................
Loans to Banks ........................
Cash Assets ................................
Other Assets .............................
Total Assets ........................

Fort Smith Area, A r k .i .
Little R ock Area, A r k .. .
Quincy, 111.........................
Evansville Area, Ind.
L ouisville Area, Ky., Ind.
Paducah, K y......................
St. Louis Area, M o., 111.
Springfield Area, M o.
Memphis Area, T e n n .. .
A ll Other Cities 2 ............

— 20
— 6
— 9
— 18
+ 1
— 9
+ 3
— 14

238 .2 p
300.4 p
209 .3 p

232 .1
3 14 .7
193 .7

Seasonally adjusted
2 17 .7 p
T o t a l............
Residential.
273.1 p
A l l O t h e r .. .
192.0 p

200.2
221 .0
190.6

183.2
200.9
175.0

2 5 7 .6
338 .4

220.1

* Based on three-m onth m oving average
(centered on m id-m onth) o f value o f awards, as
I reported by F. W . D od g e Corporation.
p Preliminary

M a y /5 4
+
+
—
—
+
+
—
+
+
+
+

11 %
13

2
2
15
9
14
15
35
7
5

$—
—
—
+
+
—
+
+
—

$2,2 90

$ + 22

2,024
4 88

— 41
— 2

1,342
62
$6,2 06

— 13
— 4
$— 38

5
14
34

6
2

44
- 0$— 78

5 mos. ’55
to same
period ’54
+ 7%
+ 12
- 0+ 4

RETAIL FURNITURE STORES
Percentage o f Accts. and
Notes R eceivable Out
standing M ay 1, 1955,
collected during May.
Excl.
Instal.
Instalment
Accounts
Accounts
17
47
42
12
44

+ 2
+
7
— 6
+ 8
+ 41
+ 6
+ 6

38
42

1 In order to perm it publication o f figures for this city (or area), a special sample has been co n
structed which is not confined exclusively to department stores. Figures for any such nondepartment
stores, how ever, are not used in com puting the district percentage changes or in com puting depart
ment store indexes.
2 Fayetteville, Pine Bluff, Arkansas; Harrisburg, Mt. Vernon, Illinois; Vincennes, Indiana; D an
ville, Hopkinsville, M ayfield, O w ensboro, Kentucky; Chillicothe, Missouri; Greenville, Mississippi;
and Jackson, Tennessee.
IN D E XE S O F SALES A N D STOCKS— 8TH D IS T R IC T
May
Apr.
Mar.
M ay
1955
1955
1955
1954
121
117
101
106
121
122
116
106
127
134
126
124
121
125
123
118
3 D aily average 1 94 7 -4 9 = 100
4 End o f M onth average 1 9 4 7 - 4 9 = 1 0 0
Trading days: M ay, 1955— 2 5; A pr., 1955— 26; May, 1954— 25.
OUT
S TFRASER
A N D IN G O R D E R S o f reporting stores
Digitized
for
than on the corresponding date a year ago.

$1,432
696
45
293
419
1,013
250
18
851
43
$3,607

A ll M em ber Banks
Change from
M ay 25,
A pril 27,
1955
1955

Liabilities and Capital
$— 32
$ 645
$— 52
Dem and Deposits o f Banks . . . .
$ 617
+ 10
3,7 9 9
+ 6
Other Dem and Deposits ...............
2,1 1 6
564
Tim e Deposits ................................
1,208
+ 4
+ 7
— 61
101
— 3
Borrowings and Other Liabilities
51
259
453
Total Capital A ccounts .................
+ 4
+ 1
$6 ,2 0 6
$3,607
$— 78
$— 38
Total Liabilities and Capital .
1 For w eekly reporting banks, loans are adjusted to cxclude loans to banks; the total is reported
net; breakdowns are reported gross. For all m em ber banks loans are reported net and include loans
to banks; breakdown o f these loans is not available.

Net Sales

3%
5
7

Unadjusted
T o t a l............
Residential.
A llO t h e r . .

W eek ly Reporting Banks
Change from
May 18,
June 22, 1955
1955

DEPARTMENT STORES

—
—
—

(1 9 4 7 -1 9 4 9 = 100)
Apr. 1955 Mar. 1955 Apr. 1954

ASSETS A N D LIABILITIES EIGHTH DISTRICT MEMBER BANKS

+ 1?
4

IN D E X O F BANK D E B IT S — 22 Centers
Seasonally A djusted (1 9 4 7 -1 9 4 9 = 1 0 0 )
1955
1954
Apr.
May
M ay
133.8
T56A
149.3

8 th F.R. District T otal .

4
3 =3
16
37 I

Source: State data from US D A prelimina*y
estimates unless otherwise indicated.

+ 18
+ 15

±1
— 11

M ay 1955
com pared with
Apr., *55

0- %

—
—
—
—
—
—

C INDEX OF C O N ST RU C TIO N CO N TRACTS
AW A RDED EIGHTH FEDERAL RESERVE DISTRICT*

+ 11

+ 21

532 .3

$4,6 80 .5

— 5% ;
+ 23 1
+21

(In thousands
o f dollars)

Percentage Change
Jan. thru Apr.
Apr. ’ 55
1955
|
from
com pared with
Apr. ’ 54 1954
1953

at the end of May, 1955, were 2 5 per cent larger

Net Sales
Inventories
May, 1955
M ay, 1955
com pared with
com pared with
Apr., 55
M ay, 54 Apr., 55
M ay, 54

8th Dist. T o ta l* . . . + 7 %
St. Louis A rea. . . . + 10
L ouisville Area. . . + 8
Memphis A rea. . . + 1 1
Little R ock Area . + 2
Springfield A rea. . + 2 0

+16 %
+20
+16
+13
— 14
+ 5

1%
2
- 0-

+
—
+

2%
2

* N ot shown separately due to insufficient coverage,
but included in Eighth District totals.

1 In addition to follow in g cities, includes stores in
Blytheville, Fort Smith, Pine Bluff, Arkansas; Ow ens
boro, Kentucky; G reenw ood, Mississippi; Evansville, In
diana.

P E R C E N T A G E D IS T R IB U T IO N O F
F U R N ITU R E SALES
Cash Sales .................
Credit Sales ...............
Total Sales ............

M ay, *55 A pr., *55
13%
13%
87
87
100%
100%

May, *54
14%

100%