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M
m
itM
yMew
July 1958
^
Volume X X X X
Number 7
d n J P%jpe7* I n J m t r y m tTte
M ts s & ip p i, T e n n e ^ e e
P U LP A N D P A P ER IN D U S T R Y grew rapidly in the mid-South
. states o f Arkansas, Mississippi, and Tennessee during the decade 1947 to 1957.
^ ^ # ^ Pu!p mil! capacity increased almost threefold.
The number of people em-
; - ployed by the industry in the forests and in the mills rose from 22,000 to
38,000 .
Substantial expansion of the industry in these three states appears likely
because of the growing demand for paper and paperboard products, avail
ability of timber supplies, and the use and development of new processes.
F e d e r a !
B a m k
St. L ottis
Survey o f Current C onditions— p. 9 0
T7ie
^nd Paper Ind^styy in Ae
Mi&So^th,— Ay^dnsds^ Mississippi, Tennessee
DuRING T H E FA ST Q U A R T E R C E N T U R Y the
pulpwood, pulp, and paper industry in the m id-South
has brought broad econom ic improvements to the
area's population.* It has been a m ajor factor in the
vigorous developm ent and greater diversification of
industry and com m erce in mid-South communities.
The feature article, Currant and Prospec^u^ Ptt%pPro& tcfion in EigTifA D istrict Sfafes, in the Sep
tem ber 1957 AfonfMy
discussed trends in
pulpwood production, pointing out its im portance as
a source of incom e, especially in the southern district
states. Increased sales of pulpwood have been re
flected in more jobs in tim ber harvesting and m anage
ment occupations. G reater returns have accrued to
tim ber owners and higher values have been placed on
"worn out" farm land with the realization of new
productive potential.
O nce southern pine was found suitable for conver
sion into paper, the rapid growth of the industry in
the South began. M ill owners, faced w ith declining
supplies of spruce and Er in other parts of the nation,
realized that new sources of raw m aterials m ust b e
obtained if the industry was to expand. T h e supply
of tim ber appeared adequate in fast-grow ing southern
forests.
Mild clim ate minimized m ill construction
costs and perm itted alm ost year-round woods opera
tions. F u el and w ater supplies were readily available,
and the supply of labor, although untrained, was
abundant, with relatively low wage rates prevailing.
The three mid-South states of Tennessee, Arkansas,
and Mississippi, on w hich this article focuses, are
favorably located for providing a share of the future
growth of the industry in the South. Eventually the
im pact of the developm ent should spread to the
forested areas of other Eighth D istrict states. T h e
future of the mid-South's pulp and paper industrial
developm ent w ill probably be determ ined not only
by the m arket for pulp and paper products, b u t also
by the extent to which a sustained yield of desirable
tim ber can be provided by the area.
D espite its maturity in age, the pulp and paper in
dustry continues to rank far above the national aver
age in growth rate. Com pared with the gross national
product rise of six times from 1900 to 1955, paper and
board production increased fourteen times. W h ile
pulp and paper output may not grow as rapidly in
the future as in the past, a relatively high growth
ra te w ill u n d o u b te d ly co n tin u e fo r a n u m b er o f
decades.
T h e United States D epartm ent of Com m erce, in a
detailed analysis of the pulp, paper, and board indus
try, e stim a te d that the n a tio n 's d em an d for paper
and board in 1965 would be 48.6 million tons, an in
crease of 34 per cen t over 1956 production.- In a 1954
report, the Stanford R esearch Institute projected a
domestic paper and paperboard consumption in 1975
of 53.5 million tons, approximately 50 per cen t above
consumption in 1956.'^
TABLE 1
PROJECTED DEMAND FOR VAR!OUS PAPER
PAPERBOARD PRODUCTS !N 1 9 6 5
Commodity
Percentage
increase
1956 to 1965
Tota! paper and board. .
48.6
+
34
Tota! p ap er....................
23 6
+
24
Newsprint .................
Printing p a p e r s ....
Fine papers...............
Coarse and specia!
industria! papers.
Sanitary and tissue
p a p e r s ....................
8.3
5.0
2.0
+
+
+
21
18
25
5.7
+
24
Tota! paperboard . . . .
Containerboard . . .
Bending board..........
Specia! food board.
Nonbending and
other paperboard
Tota! buitding paper
and board .................
Buitding p a p e r .. . .
Buitding b o a r d .. ..
Source:
2 P#//?,
3
Page 82
Protected demand in 1963
(mihtons of short tons)
AND
2.6
+
46
20.5
+
45
10.2
3.7
3.1
+ 34
+ 31
+ 148
3.5
+
41
4.5
2.2
2.3
+
+
47
60
36
United States Department of Commerce,
VP37.
/or
1957.
7929-7973, 1934.
The D epartm ent of Commerce estim ated that 34
million tons of woodpulp will be required in the
United States for paper, board, and nonpaper uses in
1965, or 42 per cent more than actual 1956 consum p
tion. In addition to the above projections, the Paley
Commission and the Forest Service have made fo re
casts of paper and board consumption and woodpulp
production in 1975.* Both estimates are substantially
above current output. Thus, from the standpoint of
the nation's demand for pulp, paper, and board
products, it appears that the industry will continue at
a high rate of growth except for temporary periods
of overcapacity and excessive inventories.
T he three mid-South states apparently have the re
sources to support a large share of national pulp and
paper industry growth. W ithin the boundaries of the
three states lie 46 million acres of tim ber, or alm ost 10
per cent of the com m ercial forest land of the nation.
Furtherm ore, net annual timber growth of 1.5 billion
cubic feet in the area in 1952 was almost 11 per cent
of net annual growth in the continental United States.
And the relationship betw een net annual growth and
tim ber cut of desirable pulping species in the three
states is more favorable than that of the national
totals. In 1952 softwood growth (pine) in the three
states was 26 per cent in excess of cut, whereas for
the nation net softwood growth was only 93 per cent
of cut. This is an especially im portant factor in
pulpmill locations, since much of the softwood tim
ber in the three states consists of young growing stock,
from w hich the highest quality pulp can be produced.
Also, because of high pulpmill investm ent costs and
the expense of hauling bulky pulpwood over long
distances, it is im portant for mills to locate near sus
tainable supplies of desirable species.
Hardwoods, plentiful in other sections of the nation
as well as in the South, have been used increasingly
for pulpmaking in recent years. However, the pro
portion of hardwoods to total pulpwood consumption
has been maintained at about 15 per cent during the
past three decades.
D espite recent technical de
velopments in making pulp and paper from such
species, it does not appear that paper of sufficient
strength to m eet most industrial requirem ents can be
made from the hardwood fibers, which are shorter
than those of softwoods, without blending them in
some proportion with softwood. Thus, while hard
wood pulps are used successfully for stiff corrugating
board, liner board, and similar purposes, for most pur
poses a blending of the longer coniferous fibers is
necessary to obtain the desirable strength and tear
resistance. T h e increasing use of such blending is a
distinct possibility as the shortage of conifers becom es
more acute.
4
A substantial margin of softwood growth over cut
is necessary if the nation is to maintain present soft
wood Rber content in anticipated pulp and paper
production in the next two decades.
Despite im
provements in tim ber management on the nation s
forest lands and the increased use of mill residues,
it does not seem likely that this level of sustainable
production will be achieved very soon. Prospects are
that the 1952 relationships betw een growth and cut
of softwood will deteriorate further in both the
nation and the mid-South before improving. Thus,
the outlook for the pulp and paper industry will
probably be characterized by a scarcity of more de
sirable softwoods and greater use of hardwoods via
various blending processes. This is a favorable factor
for the three mid-South states where large supplies
of low -quality hardwoods and pine for blending pur
poses are both available for industrial use. The other
district states of Missouri and Kentucky, as well as
parts of Indiana and Illinois, whose tim ber supplies
are predom inately hardwoods, may also benefit from
these developments as thev increase their own soft
wood supplies and draw from southern softwood
regions.
F/ri/
P/J/7 AM/
J9 7 3
T he era of pulp and paper m anufacturing began in
the mid-South in 1913 when the Southern Paper Com
pany, largely financed from England, built a mill at
Moss Point, Mississippi, for processing southern pine
pulpwood into kraft paper (a strong paper generally
used for w rapping and packaging). Previously, the
various species of southern pine had been considered
too resinous for pulping (red u cing to fibers). Some
difficulty was encountered by the Moss Point mill in
the early stages, but the troubles were soon rectified.
In 1928 the mill was sold to the International Paper
Company.^
Attracted by the success of this mill and the huge
potential supply of pine pulpwood, other paper mills
began to spring up throughout the South, several of
them in the mid-South states. By 1930, pulp and
paper or paperboard mills had been built at Cam den,
Arkansas, Harriman and Kingsport, Tennessee, and
Laurel, Mississippi, in addition to the Moss Point mill.
All were designed for making kraft paper w ith the
exception of the Laurel mill w hich made paperboard.
Th e depression brought pulp and paper mill devel
opments in the m id-South to a standstill in the early
thirties. But in the last h alf of the decade new mills
followed, including the Crossett Paper M ill at Crossett, Arkansas, and the United States Gypsum C om
pany's plant at Greenville, Mississippi.
on
V ol. V ,
1952.
U n it e d States D e p a r t m e n t of A gr ic ul tu r e ,
1955.
5
January, 1934, p. 57.
Page 83
Pine Putpwood Production by County in the Mid-South, 1 9 5 6
Hardwood Putpwood Production by County in the Mid-South, 1 9 5 6
I
N A D D ITIO N to principal producing counties shown above, the following counties had from 1 to 3,000 tons of total
pulpwood (both pine and hardwood) output: Crawford, Faulkner, Franklin, Monroe, and White Counties in Arkansas;
Benton, Clay, and L ee Counties in Mississippi; and Bledsoe, Grundy, Hardeman, Marion, and W hite Counties in Tennessee.
(Maps reproduced from United States Forest Service Release 80,
1937.)
Page 84
In 1940 the possibility of making newsprint from
southern pine was conclusively demonstrated. This
developm ent opened up a vast new m arket for forest
resources in the mid-South. Soon thereafter a mill
was constructed for making dissolving pulp ( used for
making fine paper and such nonpaper products as
rayon, cellophane, plastics, photographic Rim, and
explosives) from southern pine, further broadening
the use of m id-South forests for producing practically
all types of paper and paperboard.
compares with a low of 81.3 per cent for the nation
and 68 per cent for the Middle Atlantic States.
A number of factors contributed to the higher oper
ating ratios of southern mills. First, average pulp
production per employee has been somewhat higher
in Southern mills than the national average, probably
reflecting improved technology in mill construction
and pulping processes. Mills in the South are gener
ally newer than those in other parts of the nation, so,
on the average, they no doubt incorporate more of the
recent technological improvements. They have con
centrated on output of a smaller num ber of pulp and
paper grades. Also, the average capacity per mill in
the South is substantially greater than that of the
nation. There was an annual capacity of 167,000 tons
per mill for the South as compared with 83,000 tons
for the nation, according to estimates from the latest
Census data. Second, pulp and paper making mills
in the South are mostly integrated operations (pulp
and paper making are carried out at the same loca
tio n ), located near the forests from which pulpwood
supplies are cut. In some instances, plants which con
vert the paper into boxes, envelopes and other products
are located near the paper mills. Still another factor
is that pulpwood prices are lower in the South than
elsewhere. In 1955 rough pine pulpwood averaged
about $2 per cord less in the South than in the Lake
States. Furtherm ore, the price spread between south
ern pine and northeastern softwood was even greater.
Pulp mill capacity in Arkansas, Mississippi, and
Tennessee increased from 783,000 tons in 1947 to a
little over 2 million tons in 1957, an increase of 167
per cent (T a b le 2 ) . F ifteen mills were operating in
TABLE 2
ANNUAL WOODPULP PLANT CAPAQTY
(thousands of tons)
1947________1957
Mid-South
...............................................
783
South" ......................................................
6 ,024
United S ta te s..........................................12,789
Sources:
Per cent
increase
2 ,0 9 3 *
167
14,780
145
26,159
105
United States Pulp Producers Association, Inc.,
i/4/Ar//<r.r, 22nd Edition, 1957.
Divisions of Forest Economics, United States Department of
Agriculture,
<?/
1951.
^Estimated by Federal Reserve Bank of St. Louis on basis of data
in United States Forest Service Release 80, 1936
.Sox;/?, 1957.
the area in late 1957, and plans for sub
stantial additional capacity had been
announced. Mill capacity grew 145 per
cent in the twelve southern states cov
ered in T able 2 and doubled in the na
tion in the same period. T he mid-South's
share of the nation's mill capacity in
creased from 6 to 8 per cent and its
share of pulp production in 1957 was
estimated at 9 per cent.
Mills throughout the South have op
erated at a high per cent of c a p a c ity higher than the national average and
s u b s t a n t i a l l y higher than some other
m ajor producing c e n t e r s . ^ D uring the
eleven years 1946 to 1956, inclusive,
output from southern mills averaged
92.7 per cent of capacity. T he minimum
of 85.7 per cent in any year (T a b le 3 )
TABLE 3
WOODPULP PRODUCTtON A S PER CENT OF PLANT CAPAOTY
FOR SELECTED REC!O N S AND FOR THE UNiTED STATES
1 946-1956*
Year
New
Engtand
Middie
Attantic
Lake
West
South
United
States
1946
89.3
85.7
87.9
85.2
87.9
87.4
1947
91.9
87.8
90.2
94.1
95.6
93.4
91.3
1948
92.3
79.0
85.1
91.1
95.0
1949
82.3
68.0
70.9
82.6
85.7
81.3
1950
87.6
80.4
82.1
91.6
96.9
91.8
1951
92.2
88.0
86.6
93.6
96.2
93 .5
77.4
79.4
89.2
91.2
87.8
74.6
82.3
89.1
95.5
89.9
88.6
89.5
86.0
9 2 .6
1952
1953
1954
84.7
81.7
84.4
71.1
83.7
1955
93.3
76.3
87.9
9 4 .6
94.4
1956
93.2
85.8
88.5
92 .7
91.8
9 1.4
October
1957, pp. 240-243.
Page 85
The Ftow of Pu!p Products from Fibrous Raw M a te ria l to Markets, United States, 1955
T
.L H E F L O W of various raw materials to the final paper and paper
board markets is shown in the above chart. United States production of
pulpwood accounted for about 60 per cent of the total domestic supply
of fiber for the industry in 1955. Imports of pulpwood and woodpulp
accounted for about 10 per cent, w astepaper 27 per cent, and rags plus
other fibrous m aterials 3 per cent. About 2 per cent of the domestic
supply of pulp m aterials was exported, and 3 per cent was used in non
paper products, such as rayon, acetate, cellophane, and plastics. About
30 million tons of fibrous materials were used in domestic production
of paper and paperboard. An additional 5.4 million tons were imported
in the form of paper and paperboard (prim arily newsprint from C an
a d a ); exports totaled 800 thousand tons, about 2 per cent of the total
supply.
Almost h alf (4 6 per cen t) of paper and paperboard consumed dom es
tically is converted into boxes, bags, shipping crates and the like, for use
Page 86
in industry, trade, and in the home. About 24 per cent moves directly
into wholesale and retail trade, and 30 per cen t is used for printing and
publishing purposes.
On balance, the nation is an importer of both raw materials for the
pulp and paper industry, and paper and paperboard products. About 20
per cent of the fiber in domestically consumed pulp and paper products
in 1955 was im ported. Newsprint accounts for about two-thirds of the
total imports, w ith woodpulp and pulpwood com prising most of the
rem aining third. D om estic consumption of newsprint in 1955 was about
6.5 million tons, of w hich 5.6 million, or more than 80 per cent, was
imported. P ractically all pulpwood, pulp, and paper imports are obtained
from Canada. W hile the pulpwood t.and pulp imports are generally for
deliverv to mills near the border, newsprint is shipped to cities through
out the United States.
D uring the course of history, the pulp and paper making industry has
made use of a wide choice of raw materials. Most all low -cost fibrous
materials have been used by the industry. According to historians, the
Chinese made paper out of bamboo and m ulberry in the second centurv A.D. Flax and cotton were m ajor sources of fiber for paper in the
Arab nations prior to the development of the industry in Europe. E u ro
pean papermakers used linen rags, waste paper, fishing nets, grasses,
cereals, jute esparto, and many other fibrous raw materials.
Prior to the Civil W ar, rags were the major source of raw material for
pulp and paper in the United States. B ut as the war progressed, the
heavy demand for paper caused an acute rag shortage, and many papci
mills began to use esparto (a grass imported from the M editerranean
a rea ). About 1870, woodpulp came into use as a source of raw material
for pulp and paper. Its use advanced steadily, and in 1956 woodpulp
accounted for about 70 per cent of all fibers consumed in the nation's
pulp and paper industry.
Page 87
Kinds of Woodpuip and Paper Produced in the Mid-South
A t , L OF THE MAJOR PROCESSES for making
pulp are used in the mid-South. However, of the three
chemical pulps, sulphite, soda, and sulphate ( or kraft),
only the latter two are used, and output of kraft is by
far the greater of the two. Only three mills in 1957
used more than one pulp manufacturing process.
Sulphate (Kraft) Pulp—The first pulp mills in the mid-South were
designed exclusively for the production of sulphate, or kraft, pulp,
and this remains the leading pulp produced in the area despite the
rapid expansion of groundwood pulp capacity in recent years. In the
sulphate process, debarked and chipped wood is cooked in a digester
with sodium sulphate and steam under high pressure for two to three
hours. Ugnin and other materials in the wood are dissolved, leaving
the more resistant cellulose fibers. These fibers are brought into the
paper machine in a near liquid state and formed into a continuous
sheet of paper or board. Heat and the added chemicals are recovered
from the dissolved materials. In addition, valuable by-products, such
as sulphate turpentine, lignin, and tall oil (a source of fatty acids,
resin, and pitch) are recovered when pine pulpwood is used.
The market for kraft from southern pine has greatly expanded in
recent years. Initially, kraft produced in the mid-South was classed
as number "two" and had limited usage. It now, however, stands
out as the universal pulp Rber usable in all types of paper and paper
board, rayon and other cellulose products, as well as in tissues.
Kraft is the strongest paper made from wood, making it especially
desirable for packaging and wrapping. While its natural color is
brown, it may be bleached or semibleached. Unbleached kraft is
used primarily for industrial papers, such as boxboard, bags or
wrapping paper. Early bleaching processes resulted in a weaker
paper, but about the beginning of World War II a multistage
process which left kraft fibers with most of their original strength
and toughness came into use. Now bleached and semibleached kraft
are considered substantially interchangeable with all other types of
white pulp. They may be used in books, fine bond, envelopes,
writing paper, and newsprint, as well as for industrial purposes.
Initially, kraft pulps in the mid-South were made almost exclu
sively from fresh-cut southern pine. While the best kraft paper is
still made from freshly cut softwoods, practically all types of hard
wood and all ages of wood may now be made into pulp by the kraft
process.
One of the major disadvantages of kraft pulp is that its fiber yield
is only about 30 per cent (a half ton of fiber for each ton of wood)
compared to a yield of almost 100 per cent for both groundwood and
semichemical pulp.
Groundwood Pulp—Groundwood pulp is next in importance in
the mid-South. This pulp is produced by a mechanical process in
which the logs are pressed against rapidly revolving stone wheels,
reducing them to small fibrous particles. This method produces a
high yield of pulp and paper at relatively low cost. It is especially
adapted for making newsprint, where strength and durability are of
secondary importance. Prior to World War II most newsprint was
made from groundwood and unbleached sulphite. However, about
that time, the process was perfected for making newsprint from
southern pine groundwood blended with semibleached or unbleached
kraft at the ratio of approximately five pounds of groundwood to
one pound of kraft pulp. When this was done, the newsprint indus
try in the South was born. It grew rapidly, and in 1937 Tennessee
became one of the largest producers of newsprint in the United
States.
Page 88
TABLE 5
PULP GRADES PRODUCED )N THE MtD-SOUTH
1947
Grades of
pu!p
Number
of
produced
Sutphate
.............................
Groundwood
and M echanical...............
Dissolving ..............................
Expioded ................................
Semichemica!
1957
Capacity Number
in tons
of
Capacity
in tons
Mi!!s
per day
Mi)!s
per day
3
1,084
6
3,000
5
1,492
0
1
2
307
0
800
1
1
863
800
437
......................
3
210
4
S o d a ..........................................
JL
140
1
200
Tota!..............................
10
2,541
15*
6 ,794
* Total adds to 18 because three mills produce two kinds of pulp.
Sources:
Divisions of Forest Economics, United States Department of
A gricultu re,
/w/ofyyMf/on
/or
1951.
January
1954 and
October 1957.
Semichemical Process-The semichemical process of pulp making
is an in-between method consisting of cooking pulpwood chips in
one of the chemicals to soften them and separating the fibers in disc
refiners. This process is a recent discovery for making desirable
pulps from hardwoods. Prior to 1940, the soda process was used to
make most hardwood pulps, which were manufactured into printing
papers whose lower folding strength and tear resistance are not im
portant factors. With the semichemical process, much stronger paper
from hardwood pulps is possible.
Possibilities for blending semichemica! hardwood pulps with kraft
pine pulp are opening up a whole new market for many hardwood
species. In 1936 one mill in the mid-South went into full production
of such blended paper, from which milk cartons, paper cups, and
similar packaging materials are made. These developments are espe
cially important in this area where both hardwoods and pine are
abundant and the market for hardwoods was previously limited to
high-quality trees of a few species.
Defibrated Pulp—Exploded, or defibrated, pulp is used in making
various types of insulation and hardboards, including acoustical ceil
ing tile, accounting for about one-eighth of the pulp produced in the
mid-South. Apparently, pine is the only species of timber to which
this process is adapted.
Dissolving Pulp—Over 10 per cent of the mid-South plant capacity
in 1937 was designed for making dissolving woodpulp, using the
sulphate process. Paper and board mills use certain grades of this
product, but its major use is in nonpaper products. Rayon and ace
tate account for about 60 per cent of the nonpaper consumption, and
cellophane for about 18 per cent. Other uses include cellulose plas
tics, sponges, sausage casings, and miscellaneous specialties. Appar
ently, only the conifers are adapted to making dissolving pulps.
The Soda Process—Only a small per cent of mid-South pulp is
produced by the soda process, which, however, preceded the kraft
process and was the chief way of making pulp from hardwoods
prior to 1940. Wood chips are boiled in caustic soda under steam
pressure, breaking them down into fibers. The soda is recovered and
used again. Such pulp is used primarily for making books and fine
paper.
in the large, modern mills in the area. Em ploym ent in
y 4 r^ i E r^ ^ w y
In 1956 pulp and paper company purchases of
pulpwood in the South totaled $405 millioiT and mill
and factory payrolls totaled $351 million, while $21
million was spent for professional and other forestry
services, according to the Southern Pulpwood Con
servation A s s o c i a t i o n .
Together these i t e ms are
equivalent to almost one-fourth of the total farm pro
prietors' income in the South.
In the three mid-South states, wages and salaries
paid out by the pulpwood. pulp, and paper industry
cutting and transporting the pulpwood to concentra
tion centers rose from about 10.000 in 1947 to about
17,000 in 1957, or approxim ately the same percent
age as the increase in pulpwood production.
The rapid increase in pulpwood consumption in the
South during the three decades 1926 to 1956 further
indicates the impact of the industry on the three midSouth states. Consumption of pulpwood at southern
mills rose from 1.1 million cords in 1926 to 20.2 million
cords in 1956 (T a b le 4 ) . The South's share of total
national consumption increased from 16.7 per cent in
1926 to 56.5 per cent in 1956.
in 1956 arc estimated at $128 million, or approximately
one-sixth as much as farm proprietors earned there.
TABLE 4
Furtherm ore, such wages and salaries more than tri
PULPWOOD CONSUMPTtON BY YEARS
pled in the decade betw een 1947 and 1957, while farm
(th o u s a n d
proprietors' income declined about 15 per cent,
M!D-SOUTH EMPLOYMENT AND PAYROLLS !N THE
PULP AND PAPER !NDUSTRY
- l t30
co rd s)
Year
The South
1926
1,134
6,766
16.7
1931
1,925
28.7
34.9
37.5
Yota! United States
1936
3,047
6,723
8.716
1941
6,227
16,580
of Iota!
1946
7,518
17,818
42.2
1951
12,854
26,522
48.5
1936
20,196
35,749
56.5
Source:
for 1926-1951 data.
October 1954, p. 2 14,
O ctober 19 5 7 , p. 243 for 1956 data.
Pu!p mms
20
65
i9 4 7
)957
[9 4 7
!9 5 7
The industry in the mid-South is, to a great extent,
integrated with that of the rest of the South. For
example, pulp mills in Louisiana process some pulp
wood from Arkansas. Alabam a mills purchase pulp
wood from Mississippi, and some Georgia wood is
shipped to mills in E a st Tennessee. On balance, the
three mid-South states exported about 5 per cent of
their pulpwood production in 1957, processing about
M iss is sip pi and T e n n e s s e e E m p l o y m e n t Sec ur ity D iv is io n s .
Data
for p u l p w o o d ha r ve st in g e st im at ed by the F e d e ra l R ese rv e B a n k o f
95 per cent.
The pulp and paper industry is one of the fastest
Em ploym ent, like wages and salaries, also increased
substantially. From approximately 22,000 in 1947,
the number of workers in the industry increased to
approximately 38,000 in 1957. Th e estimated number
of factory workers engaged in making paper and con
verted paper products rose Irom about 12,000 to
approximately 21,000, an increase of 75 per cent
during the decade. Pulp production increased by
2.5 times over the period as production per man rose
much faster than total employment. This change
points up the increasing cfRcicncy of labor utilization
growing industries in the m id-South, and prospects
are excellent lor additional growth. W ith the nation's
demand for paper and paperboard expected to con
tinue upward, a substantial portion of the additional
plant capacity necessary for m eeting demand growth
will probably be located there. Supplies of suitable
timber, a major factor in determ ining the location of
new plants, appear more nearly adequate in the midSouth than in most other sections of the nation.
C L IF T O N
PHYLLIS
B.
LU TTRELL
C. ELSASS
Page 89
O F CURRE NT C O N D ! T ) O N S
T M ID -Y EA R , hopeful signs of a firming trend in
the econom y are emerging. Some slowing of the
decline was evident in M ay and June, when several
key indicators registered the best showing since the
beginning of the recession.
A possible sign of improvement is the rise in the
basic steel industry. Steel mill operations had dropped
to 47 per cent of capacity during April. After eight
successive weekly gains, production in the week end
ing June 21 was 1.73 million tons with mills running
at 64 per cent of capacity. An upsurge in activity at
steel plants in the St. Louis area brought production
from 61 per cent of capacity in April to 95 per cent
in June, the highest rate since the beginning of the
downturn last fall. However, the prospect of a price
rise in July makes the substantial gain in steel pro
duction and shipments difficult to assess, since some
of the upturn may have resulted from hedge buying.
On the other hand, consumption has run ahead of
production all of this year and replenishment of
depleted inventories probably accounts for some of
the increase.
Auto production in M ay was up from the April
rate and continued firm in June, but output was still
down about one-third from year-ago levels. More
cutbacks are scheduled for early summer in prepara
tion for the new models.
new nonfarm private housing starts in the nation
moved upward from an annual rate of 950,000 in
April to about 1,000,000 in May. Applications for
FH A insurance of mortgages on proposed one to fourfamily-homes rose sharply to the highest level since
early 1955, suggesting a further expansion in building
activity.
Personal income, which has been maintained at a
relatively high rate throughout the recession, has
been rising for three successive months. Gains in
M arch and April stemmed largely from increases in
unemployment compensation and a rise in social
security benefit payments. In May, however, the gain
of $1.2 billion included a $700 million gain in wages
and salaries, the first increase from this source since
last August.
T h e num ber of persons receiving unemployment
benefits, w hich had mounted steadily since last fall,
began leveling off in mid-April. By the end of May,
insured unemployment was about the same as in Ja n
uary of this year. T h e drop in insured unemploy
m ent betw een April and May was the result of more
than 200,000 persons exhausting their benefit rights
and some persons being recalled to work. Total unem
ployment, although improved by the recall of workers
(especially those engaged in outdoor w o rk), was
aggravated by the usual spring entrance of students
to the labor force.
T he increased activity in steel and autos was reHected in the Fed eral Reserve Board's national index
of industrial production, which edged up one point in
M ay to 127 per cent of the 1947-1949 average. This
was the Rrst month-to-month gain in the index since
June 1957. Im provem ent was also shown by the num
ber of railroad cars moving ores, grain, and finished
products. F reig h t car loadings reached 622,000 on
June 14, the highest recorded this year.
D istrict lum ber production is up. Southern pine
output has been running ahead of year-ago levels
since the m iddle of M ay, and in the week ending
June 14 was 13 per cent over the like week in 1957.
Hardwood mills w hich have been running at about
70 per cent of capacity increased in June to 82 per
cent. O utput of aluminum and lead, however, was
cut in May at district plants.
Stim ulated by an increase in the supply of m ort
gage money and liberalization of VA and FHA terms,
Page 90
Unemployment in the major metropolitan areas of
the E igh th Fed eral Reserve D istrict was reduced
slightly betw een April and May. Th e number of
claimants for unemployment insurance decreased from
m id-April to m id-M ay in E v a n s v ille , L ittle Rock,
Memphis, and St. Louis bu t increased in Louisville.
M id-June insured unemployment decreased in all five
areas from m id-M ay levels.
Nationally, nonagricultural em ployment in May
showed an increase over April, w hich was the first
better than seasonal rise since last August. M anufac
turing em ploym ent fell again in M ay and was 1.7
million, or 10 per cent, under th at of a year ago. Sea
sonal resumption of construction activity was the big
factor in offsetting the decrease in m anufacturing em
ploym ent betw een April and M ay. Although the num
b er of people working in the nation's factories in May
was down from April, the average num ber of hours
worked per week was up slightly.
In the five largest district m etropolitan areas, em
ployment remained at about the same levels from
April to May. W ith the exception of L ittle Rock and
St. Louis, February em ployment was at the 1958 low
point in district areas. A February to May com pari
son shows employment increases of less than 1 per
cent in Evansville and Memphis, white Louisville had
the same number employed in May as February.
L ittle Rock has had increases each month since the
beginning of the year, but St. Louis area employment
was at its 1958 low point in May.
holdings of district banks, which have been occurring
for several months, reflect reduced business activity
and a n o n re stric tiv e monetary policy. In v e stm e n t
holdings of weekly reporting banks in the district, as
well as in the rest of the nation, have increased sub
stantially in recent months, as can be seen from the
accompanying chart, which shows the cumulative
LOANS AND !NVESTMENTS WEEKLY REPORUNG BANKS
Bittion DoHars
Unemployment averaged 8 to 10 per cent of the
labor force in May in Evansville, Louisville, Memphis
and St. Louis. W ith the addition of Memphis on
M ay 28, all four areas are now officially classified by
the D epartm ent of Labor as areas of substantial labor
surplus. In M ay a year ago unemployment averaged
betw een 4 and 5 per cent in these areas.
Consumer spending has held at a high rate all year,
although the pattern of spending has changed, with
less going for durable goods and more for nondurables
and services. Nationally, total retail and department
store sales in May were slightly less than a year ago.
At district departm ent stores, sales through June 21
were down 4 per cent from last year.
Another factor to be taken into account is the re
duced outlay for plant and equipment. According to
the latest Commerce D epartm ent-SEC Survey, antici
pated business outlays for fixed capital in 1958 will be
$30.8 billion, 17 per cent less than actual expenditures
in 1957.
E arning assets of district weekly reporting banks
rose $42 million from mid-April through June 18,
with all of the growth occurring in investment hold
ings. Holdings of United States Government bonds
increased $45 million in the nine weeks. Businesses,
on the other hand, reduced their indebtedness at
district banks at a somewhat sharper rate than in the
like period of recent years. N et repayments of these
loans amounted to $40 million, or 5 per cent.
Partially offsetting the contraction in business loans
were sizable net increases ($ 2 8 m illion) in loans on
securities, primarily to brokers and dealers. In late
May and early June, loans on securities at district
weekly reporting banks exceeded $100 million, the
highest level of borrowings on securities at these banks
since early 1946. "O ther," largely consumer, loans
rose moderately, while advances to finance real estate
declined somewhat.
T h e recen t changes in business loans and investment
changes in bank loans and investments since the
beginning of the year. Largely as a result of the
lowered reserve requirem ents on demand deposits of
banks and the smaller demand for business loans, dis
trict weekly reporting banks have purchased invest
ments on balance. Investm ents of district banks at the
beginning of the year were 40 per cent of total earn
ing assets, whereas on June 18 these holdings con
stituted 45 per cent of the total.
In contrast to the sizable loan contraction at the
urban banks during the first half of the year, indica
tions are that the rural area banks extended an aver
age amount of credit in the Erst half of this year.
Page 91
^
VARiOUS !ND!CATORS OF !NDUSTR[AL ACT!V!TY
Coal Production Index— 8^h^^ist. ^Seasonally adjusted, 1 9 4 7 - 4 9 = ^ 1 0 0 ) ..........................
^84.1 p
1?" .)
E a st St. Louis—
N ational Stock Yards,
IH....................................... $ 1 4 4.2
Evansville, In d ............
1 6 4 .6
L ittle Rock, Ark.
. .
2 1 3 .9
Louisville, K y .................
9 3 4 .7
Memphis, Tenn.
74 5.5
St. Louis, M o ................. _ 2 ,2 3 5 .7
1958
1957
3S
3
1
—
—
—
—
— 13
+ 2
+ 6
— 4
— 9
3
Tota l— Six Largest
C e n ters........................$ 4 ,4 3 8 .6
5%
$
E l Dorado, Ark............
F ort Sm ith, Ark.
G reenville, M iss..........
H annibal, Mo.
Owensboro, Ky............
Paducah, Ky. .............
Pine Bluff, Ark...............
Quincy, 111...................
S edalia, M o ...................
Springfield, M o.............
T exarkana, A r k ...........
—16
M ;"y 21
1958
$ 1 ,5 8 9
762
107
273
474
1 ,0 3 0
259
28
951
43
$ 3 ,9 0 0
$— 4
— 15
+ H
— 3
+ 5
+ 7
+ 10
+ 23
+ 00
— 1
$ + 95
4 2 .8
1 6 .2
2 9 .5
5 8 .7
2 7 .2
12.0
8.0
2 6 .0
12 1.0
4 8 .7
2 9 .7
3 9 .4
4 5 .8
18 .0
100.8
19.8
+ H%
— 6
— 1
-{- 1
+ 7
- 0— 18
— 2
— 21
+ 4
+ 7
— 4
+ 6
+ 7
+ 5
+ 3
- 0- %
— 2
— 8
6 4 3 .6
—
+
Dem and D eposits of Banks
Other Demand Deposits
+ ?
+ 1
+ 9
— g
- 0+ 45
$ 722
2 ,1 2 7
661
83
307
§ 3 ,9 0 0
$ + 25
+ 67
+ 6
— 4
+ 1
$ -9 5
^ 'w e e k f % S d ? d ^
6 -1 8 -5 8
Business of Borrower
M anufacturing and M ining:
S— 4
— 7
+ 3
2
1
—
—
Retail
..........
—- 1
Com modity d ca t.rs
— 4
4
.
+ 1
— 1
+ 5
All Other
T o ta l.................................................. $— 17
elude loans to banks; the total is reported n et; breakdowns are reported
- Changes in business loans by industry classification from a sample of banks holding roughly 9 0 %
of the total com m ercial and industrial loans outstanding at Eighth D istrict weekly reporting m em ber
banks.
-— 5
— 4
4- 6
+ 10
+ 10
— 3
CASH FAR/A !N C O M E
C O N S T R U C T IO N C O N TR A C T S A W ARDED
)N EtGHTH FEDERAL RESERVE D iSTR iC T *
T o ta l— Other
Centers
T otal— 2 2 Centers
Jun<-18
1958
Liabilities and Capital
Other Reporting C enters:
.
+ ^^
! D !ST R !C T W EEKLY R E PO R TtN G MEMBER BA N KS
Six Largest C enters:
^
- 4
M ay 1 9 5 8 ^
1958
A lto n ^ Ill. ^
—
^7 r
J^ad ^ ^ ^ )y Vv^ ^ )
SA N K D E B !T $ I
May 1958^
Compared with
Apr. ! 9 5 8
May 1 95 7
May
$
. $ 5 ,0 8 2 .2
3 %
- 0- %
8%
Apr. '5 8
— 3%
IN D E X O F BANK D E B I T S — 2 2 Centers
Seasonally Adjusted ( 1 9 4 7 - 1 9 4 9 = 1 0 0 )
1958
1 7 3 .2
1957
*173.6
179.3
7 States
8th D istrict!
195 8
$ 3 2 ,1 4 0
1 5 4 ,8 7 5
8 4 ,2 0 7
2 5 ,4 2 6
2 8 .7 1 3
7 7 ,2 5 6
2 6 ,3 9 6
4 2 9 ,0 1 3
1 7 7 ,6 0 9
1 9 58*^ *
A jr ."'5 7
9 5 7 ^ ' '1 9 5 ^
+ 2 3% + 9 % — 17%
3
+ 10
+ ^
+ 14
+ 8
+ 1
13
— 6
+ 6
+ 19
— 23
+ 8
+ 16
+ 12
+ 7
+ 17
. +
— 6
1
+ 12
- 0+ 2
—
3
+ 13
+* 2
19 5 8
1957
$ 1 2 1 ,5 0 4
4 0 ,8 2 3
5 4 ,8 5 4
$ 1 0 6 ,2 6 2
4 7 ,5 3 0
3 6 ,5 8 9
2 5 ,8 2 7
2 2 ,1 4 3
1958
Total
.............$ 1 2 9 ,5 5 2
Residential
5 0 ,3 6 0
PubH ^w Skf
and Utilities
3 2 ,5 3 6
ra tio n .""^
^
!N D EX ES O F SA LES A N D S T O C K S — 8TH D iSTR tCT
DEPARTM ENT S TO R ES
M ay
1958
Apr.
1958
Mar.
1958
May
1957
1 37
. . 136
123
130
1 49
141
117
134
146
140
138
137
151
151
Outstanding Apr. 3 0 / 5 8 ,
N et Sales
M ay, 1 9 5 8
8th F .R . D istrict T otal
F ort Sm ith Area, A rk.l
L ittle Rock Area, Ark.
E vansville Area, Ind.
Louisville Area, Ky., Ind.
Louisville (City)
Paducah, Ky.
St. Louis Area, M o., 111.
^ St. L o iu s^ C ity )^
All Other Cities-
+ 11%
+ 23
+ 11
— 7
+ 7
+ 5
+ 2
+ 1
+ 16
+ 14
-j-1
3
+ 13
+ 6
— 6
^ 5 n i o s .'5 8
— 4%
— 1%
— 4
+ 7
- 0+ 1
— 3
- 0— 20
— 20
— 5
+ 1
:— 7
— 3
+ 2
+ 16
— 3
+ 1
— 5
—
1
— 4
— 6
^ 7
— 5
— 11
— 9
^
^
Excluding
15%
52%
41
30
15
41
16
62
13
36
2
Fayetteville, Pine Bluff, Arkansas; Harrisburg, Mt. Vernon, Illinois; V incennes,
Indiana; D anville, Hopkinsville, MavReld, Owensboro, Kentucky; C hillicothe, M is
souri; G reenville, Mississippi; and Jackson, Tennessee.
3 D aily average 1 9 4 7 - 4 9 — 100
4 E n d of M onth average 1 9 4 7 -4 9 — 1 0 0
T rading days: M ay, 1 9 5 8 — 2 6 ; Apr., 1 9 5 8 — 2 6 ; M ay, 1 9 5 7 — 2 6 .
RETAtL FURN !TURE S T O R E S
N et Sales
M ay, 1958
Apr., '5 8
8th D ist. T otal*
+
+
+
+
+
+
15%
13
26
3
38
36
May, '5 7
— 2%
— 6
+ 3
+ 6
+ 1S
— 2
@FedFRASER