Full text of Review (Federal Reserve Bank of St. Louis) : June 1951

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Monthly Review
Volume XXXIII

THE
EIGHTH
DISTRICT
AND THE
DEFENSE
PROGRAM




JUNE, 1951

Number 6

In J u n e 9 19509 w a r in K o r e a b r o u g h t a b o u t a
m a jo r r e v is io n in s c o p e a n d s c h e d u lin g o f o u r
d e f e n s e p r o g r a m . T h e fig h t in g a n d t h e p r o je c t e d
in c r e a s e in d e f e n s e e ffo r t h a d a s t r o n g im p a ct o n
c o n s u m e r a n d b u s in ess p la n s . T h e n e t r e s u lt w as
c o n s id e r a b le ex p a n sio n in in d u stria l a n d b u sin ess
a ctiv ity in th e U nited S ta tes a n d in th is d is tr ict.
M ost o f th a t ex p a n sio n s o f a r h a s b e e n d u e to
civ ilia n d e m a n d , b u t t h e d e f e n s e p r o g r a m is g r o w in g a n d w ill g r o w m o r e .
D e fe n s e s p e n d in g n o w is c o n s id e r a b ly s m a ller
th a n in W orld W ar 11 a n d t h e d e f e n s e d ra in o n
n a tio n a l p r o d u c t io n is r e la t iv e ly sm a ll in th e a g ­
g r e g a t e . It is in c r e a s in g 9 h o w e v e r , a n d w h ile it
w ill n o t a p p r o a ch th e W orld W ar II d ra in (a ssu m ­
in g w e ca n a v o id g lo b a l w a r) it w ill b e s ig n ifica n t .
S o fa r d e f e n s e o r d e r s in th e d is tr ict a r e n o t in
la r g e v o lu m e . C on tra cts a r e c o n c e n t r a t e d g e o ­
g r a p h ic a lly a n d in d u stria lly a s in W orld W ar II.
G o v ern m en t ex p e n d itu r e s p r o j e c t e d f o r c o n s t r u c ­
tio n a n d ex p a n sio n o f d e f e n s e p la n ts a r e siz a b le •
W orld W ar II in d u stria l fa c ilit ie s a r e b e in g r e ­
a ctiv a te d o r ex p a n d ed • T h e s e ex p e n d itu r e s d i­
r e c t ly a ffe c t lo c a l a r ea s9 p a r ticu la r ly t h e s m a lle r
a r ea s . L abor r e q u ir e m e n t s f o r c o n s t r u c t io n a n d
p r o d u c t io n a r e b e in g m e t w ith o u t m u c h d iffic u lty
b u t h o u s in g c o n s titu te s a p r o b le m in s o m e sm a ller
a r ea s as d o e s o t h e r n e c e s s a r y c o m m u n ity fa cilitie s .
D e fe n s e r e q u ir e m e n ts w e r e s u p e r im p o s e d o n
h ig h l e v e l civ ilia n d e m a n d . T h e w a r situ a tio n
stim u la ted p r iv a te s p e n d in g f o r c u r r e n t c o n s u m p ­
t io n a n d in v e n t o r ie s . It a lso e n c o u r a g e d p r iv a te
ca p ita l in v e s tm e n t in p la n t a n d e q u ip m e n t . O n e
r e s u lt o f in c r e a s e d a ctiv ity h a s b e e n g r o w in g
s h o r t a g e s o f m a ter ia ls . O th er p r o b le m s a lso h a v e
a r is e n a n d t h e o u tlo o k is f o r m o r e p r o b le m s as
t h e d e f e n s e p r o g r a m c lim b s to its p ea k .

In J u n e 9 19509 w a r in K o r e a b r o u g h t a b o u t a
m a jo r r e v is io n in s c o p e a n d s c h e d u lin g o f o u r
d e fe n s e p r o g r a m .
For nearly twelve months the United Nations
forces and the armies of North Korea and Com­
munist China have fought up and down the moun­
tains and valleys of Korea. When the fighting
began, the United States, together with other free
nations, was beginning to rebuild its defenses.
After June, 1950, the defense program was stepped
up considerably, both in amount of expenditures
and in timing. The fact of Korea brought home
sharply the need for a much stronger defense estab­
lishment in a shorter period of time than had been
contemplated. And the more rapid defense build-up
was to take place while we were engaged in actual
war, even though that war was “ limited” .

T h e fig h tin g a n d th e p r o je c t e d in c r e a s e in d e fe n s e
e ffo r t h a d a s tr o n g im p a ct o n c o n s u m e r a n d
b u s in ess p la n s .
With the change in the international situation
came changes in plans formulated by consumers
and businessmen. Remembering the shortages of
goods, the rise in prices and the deterioration in
quality of goods that developed during W orld War
II, consumers quickly began to lay in extra sup­
plies of many items. They also began buying
ahead of their actual current requirements. Essen­
tially the same reaction was experienced by retail­
ers, wholesalers and manufacturers. They also
began placing large orders, just in case.

T h e n e t r e s u lt w as c o n s id e r a b le ex p a n sio n in
in d u stria l a n d b u s in ess a ctiv ity in th e U nited
S tates • • •
As a result of increased demand by the military
and civilians, economic activity expanded consid­
erably after Korea. Total output of all goods and
services in second quarter 1950 was at an annual
rate of $272 billion. The rate in the first quarter
of 1951 was $314 billion and the second quarter
figure will be higher still. While this increase
reflects price rises as well as more physical out­
put, the gain in physical terms alone has been
some 7 or 8 per cent. And physical volume of
industrial production is now about 12 per cent
higher than in June, 1950. Total nonagricultural
employment is up by 2 million and manufacturing
industries employ 10 per cent more workers now
than just before the Korean conflict began.
. . . a n d in th is d is tr ic t •
Industrial and business activity in this district
also is at a substantially higher level now than a
year ago.
Nonagricultural employment in the
Page 74




industrial centers is almost 10 per cent larger
while the increase in manufacturing workers is
even greater. Income has advanced considerably
above last year’s level, reflecting increased wage
income and the impact of higher agricultural prices
in a region where farm production is relatively more
important than in the nation as a whole.

M ost o f th a t ex p a n sio n s o fa r h a s b e e n d u e to
civ ilia n d e m a n d , . . .
So far the bulk of the expansion in activity since
June, 1950 has reflected a civilian boom rather than
a defense boom. Already noted is the fact that the
Gross National Product in first quarter 1951 was
at an annual rate of $314 billion, about $42 billion
more than in second quarter 1950. About threefourths of this increase reflected greater civilian
demand; only one-fourth was due to increased
defense demand.
The point is, of course, that it takes time to
develop the full force of a defense program of the
magnitude scheduled. Plans for increasing defense
work followed almost immediately the Korean out­
break. But programming, contract letting, actual
production work and final delivery of items cannot
be achieved overnight. Many of the principal items
of modern war equipment have a very long “ lead
time” between placement of order and delivery date;
in some instances that “ lead time” may be as much
as two or three years.
The result is that many contracts awarded last
fall are not fully reflected in production figures even
yet. And actual expenditures for defense goods do
not keep pace with contracts let. Thus the full
impact of the present level of contracts let is still
in the future, and the volume of contracts let is to
increase substantially as time goes on.

b u t t h e d e f e n s e p r o g r a m is g r o w in g a n d w ill g r o w
m ore.
Some indication of future impact may be obtained
from noting the rising rate of contracts let. In the
first six months following Korea, military procure­
ment (exclusive of pay, etc., for the armed forces)
and construction totaled $12 billion. That figure
was matched in the first three months of 1951.
Defense orders are now being placed at a rate of
$1 billion per week, and deliveries to the military
are about $1 billion per month.
The acceleration in defense orders has pushed
defense expenditures higher. In the current fiscal
year (ending June 30, 1951) the Federal Govern­
ment’s budget expenditures for national defense
and defense-related purposes, are expected to total
some $26 billion. The next fiscal year will see a

further expansion. In his message to Congress
early last month the President estimated that some
$49 billion would be required to pay the defense
bills, including military and economic aid to foreign
countries, coming due during the fiscal year ending
in mid-1952.
D efense spending now is considerably smaller
than in World War II . . .
While defense expenditures are rising, they are
substantially smaller both in absolute and relative
terms than during W orld W ar II. At the peak in
that war, annual outlays totaled some $85 billion
and accounted for approximately 85 per cent of
total budget expenditures. This compares with
about 54 per cent during the current fiscal year and
an estimated 68 per cent in fiscal 1952.
and the defense drain on national production is
relatively small in the aggregate.
The number of dollars spent is one measure of
the amount of goods and services which the defense
program requires. But the size of the defense bill,
expressed in dollars, is less significant in many
respects than the amount of materials and manhours of labor represented by the dollar figures.
Dollars for defense can be created fairly easily.
The raw materials, the finished goods and human
energy consumed in war are not so easily obtained.
Currently the defense program is taking about 11
per cent of our total national output, a relatively
small proportion. This compares with about 9
per cent in the first quarter.
It is increasing9 however9 • • •
Reflecting the acceleration that has occurred in
letting contracts for material, and the time lag that
exists between commitments and deliveries, the
defense take is expected to grow during the coming
months. By the end of 1951 it should climb to
about 15 per cent of total production. At the peak
of the presently planned program, and assuming
no all-out war, the take is expected to rise to about
20 per cent. By comparison, at the peak of W orld
W ar II about 45 per cent of the nation’s total output
was being channeled into war and related activities.
and, while it will not approach the World War II
drain (assuming we can avoid a global w ar) it
will be significant.
These estimates refer to the proportion of total
output of goods and services that is required for
defense and related activities. On that basis the
military drain appears relatively small and lends
credibility to the belief that we can fight a limited




war and at the same time prepare for worse eventu­
alities without curtailing civilian supplies very
much. The drain on specific industries and materi­
als, however, is substantially larger than is sug­
gested by the over-all ratios. Thus the impact on
the civilian economy is likely to be greater than
these ratios would indicate. It is estimated that
late this year about one-fifth of the available supply
of steel and copper and more than one-fourth of
the aluminum will be required for the defense pro­
gram.
It should be noted, too, that these estimates refer
only to Government-financed expenditures. In
addition there are defense-related expenditures of
private capital. New productive capacity, financed
privately and directly related to the defense pro­
gram, is one example. Already some 1,200 neces­
sity certificates authorizing total or partial amor­
tization in five years of $5.4 billion of capital in­
vested in defense supporting industries have been
approved by the Defense Production Administra­
tion.
So far defense orders in the district are not in
large volum e.
No very reliable estimate of defense contract
volume in the Eighth District proper is obtainable
at present.1 Indications are, however, that the dis­
trict share so far is relatively small and probably
less than would be the case if contracts were dis­
tributed proportionate to total manufacturing out­
put. On the other hand, the district is receiving a
substantial amount of awards for new, expanded
or reactivated facilities.
Through March 7, the district had received $65
million in “ non-classified” prime defense orders (see
footnote 1). This amount would be swelled consid­
erably were the volume of “ classified” contracts
known. Tw o district firms alone are reported by
the press to have prime contracts (presumably
“ classified” ) amounting to $200 million. Also, the
project orders going to Government-owned and
1
Current reporting on defense contracts so far has been m uch more
restricted than during W orld W a r I I , apparently both for security
reasons and because it takes time to set up an adequate statistical
reporting operation.
Such data as are available generally are quite late;
for example, even national totals on contract awards covered only first
quarter 1951 at the time this article was written. V ery little individual
contract information is available, and what is covers only “ non-classified”
contracts— contracts for the so-called housekeeping items.
M an y of the
munitions and combat materiel contracts fall into the “ classified” category
and information with respect to these is restricted.
I n this district
“ classified” contracts constitute the m ajor portion of the contract awards
to date; consequently data on “ non-classified” contracts give little indi­
cation of total volume of work received in this region.
O n a state basis, the M unitions Board reports contract volume
(classified and unclassified combined) but such state figures exclude
certain contracts let.
Probably more important than such exclusions is
the fact that project orders to military establishments are not covered in
the M unitions Board reports.
Finally, the state figures are not a very
good indication of where work is actually to be done because ( 1) many
of them are tabulated by the location of the contract recipient’ s home
office while his plants m ay be located elsewhere, and ( 2 ) since only
prime contracts can be covered, there is no indication of the volume of
subcontracting work to be done or where such work is performed.

Page 75

operated facilities in the district should be added in
to get a total of defense work (exclusive of sub­
contracting) to be done here.
But even so, the district’s defense orders seem to
be low relative to its manufacturing output. And
so far, district firms do not seem to have obtained
much subcontract work. In part that reflects the
fact that most district firms are still able to manu­
facture for the civilian market and are under no
pressure to seek defense work. But it also reflects
the fact that under a limited defense program, con­
tracts can be performed fairly easily by the prime
contractors and their traditional suppliers and they
are under no particular pressure to seek widespread
subcontracting.
An indication of the reltaive smallness of district
defense orders may be seen in the slight demand
for financing of defense contract work. A very
small proportion of commercial bank lending is
going to finance defense work—perhaps not more
than 2 or 3 per cent of total new loans made. That
small figure reflects lack of demand for financing;
the banks are eager to finance defense work when
they get the chance. Only 19 applications for Regu­
lation V loan guarantees were received by the Fed­
eral Reserve Bank of St. Louis from the inception
of the new V Loan program through April, 1951.
The total sought was less than $4 million.

Contracts are concentrated geographically . . ,
In view of the concentration of a major portion
of the district’s industry in five industrial centers,
it is not surprising that 87 per cent of the unclassi­
fied defense contract volume also is concentrated in
these industrial areas. Approximately 63 per cent
of the $65 million of unclassified orders have been
placed with firms in the St. Louis area. An addi­
tional 14 per cent has gone to manufacturers in the
Louisville area, 6 per cent to Memphis firms, 3
per cent to those in Evansville, and 1 per cent to
Little Rock companies.
While information on classified contracts, as
noted, is not available, these naturally would flow
to major producers who are located in the big cities.
And actual munitions production going outside the
district’s major cities would consist mainly of
project orders to military production establishments
such as those at Camden, and Pine Bluff, Arkansas.

. . . and industrially • • •
There is a similar but less marked concentration
of unclassified defense orders on an industrial basis.
Roughly 27 per cent of these contracts are for shoes
and other leather goods products. The metal work­
Page 76




ing industries are next in importance, accounting for
about 25 per cent of the total. Food processing, to­
gether with the textile and apparel industries,
account for another 25 per cent.

• • • as in World War Ih
The bulk of the prime supply contracts awarded
to district firms between mid-1942 and mid-1945
also went to companies in the larger cities. Of the
$6.2 billion of such contracts placed during that
period, approximately 85 per cent were received by
firms in the five industrial centers.

Government expenditures projected for
construction and expansion of defense
plants are sizable • • •
The estimated cost of new Government defense
plant facilities to be built in the district, together
with expenditures for reactivating or expanding
existing facilities, adds up to close to a billion
dollars. This sum is equivalent to almost ninetenths of the amount the Government spent for
manufacturing plant and equipment in the district
during all of W orld W ar II.
Between mid-1940 and August, 1945, more than
$1.4 billion of public and private capital was in­
vested in manufacturing capacity in this region. Of
this amount, Federal Government outlays totaled
$1.2 billion. Most of the publicly-financed facilities
were designed strictly for the production of war
goods and closely related materials. Thus, 93 per
cent of the Government investment was in the
ordnance, chemical, nonferrous metals, and aircraft
industries. The largest single plant built by Gov­
ernment was the $130 million St. Louis Ordnance
Plant.
The expansion of existing defense industries, both
privately and publicly owned, under the present
defense program is taking place in a number of
district areas. But a large part of the Govern­
ment’s dollar expenditures going for new defense
plants is concentrated in essentially one project in
western Kentucky and one in the St. Louis area.
Late last year the Atomic Energy Commission re­
vealed plans for the construction of a $500 million
plant near Paducah, Kentucky. At the same time
the T V A announced that it would build a $120
million steam generating power plant in that vicin­
ity to furnish part of the AEC plant’s power
requirements. Across the Ohio River, at Joppa,
Illinois, a $90 million power plant is being con­
structed as a joint enterprise by five privately
owned utility companies. This plant also will fur­
nish part of the power requirements of the atomic
energy facility. The three projects are estimated

to require a total of 19,000 construction workers and
some 2,000 permanent operating personnel. The
peak of construction requirements is expected to be
reached this fall. The facilities will be completed
sometime before mid-1953.
Another big atomic energy installation will be
put in the W eldon Spring area, just southwest of
St. Louis. An explosives manufacturing operation
was located there in W orld W ar II. As this article
is written, there is no firm estimate as to the total
cost of the project. It is expected to take three or
four years to complete and employ 5,500 construc­
tion workers at the peak. About 1,000 production
employees will be used in its operation.
W orld War II industrial facilities are being
reactivated or expanded .
As indicated earlier, a large part of the industrial
capacity installed in the district during W orld W ar
II was financed with Government funds. Some of
the facilities that were adaptable to peacetime uses
were sold or leased to private companies after the
war. Other installations were retained by the Gov­
ernment on a standby basis.
A number of the standby plants are being reacti­
vated ; others are expected to be brought back into
operation. And in some instances, substantial ex­
penditures for expansion of the facilities have been
programmed. The total expenditures projected to
date for the reactivation or expansion of Govern­
ment-owned facilities add up to at least $75-$80
million. The largest single project in this category
is the $35 million expansion of the Navy’s rocket
plant at Camden, Arkansas. When completed, the
plant may provide employment for 4,000 to 5,000
people. The expansion program is requiring sev­
eral thousand workers.
A lso in Arkansas is the arsenal at Pine Bluff
where additional facilities costing an estimated $18
million are to be constructed. Near Charlestown,
Indiana, some $12.6 million is to be spent for the
reactivation of the Indiana Arsenal. In Louisville,
the Navy's Ordnance Plant and two Governmentowned synthetic rubber plants are being brought
into production. The Small Arms plant in St.
Louis, also is scheduled for reactivation.
In addition to reopening or expanding facilities
that were retained by the Government on a standby
basis, some of the W orld W ar II plants which were
sold or leased to private companies are being ex­
panded. Am ong these is the du Pont plant in
Louisville where synthetic rubber is produced. An­
other facility in this group is the Reynolds Metals
Company plant at Jones Mill, Arkansas, where addi­




tional capacity has been added since Korea, The
Government’s steel making facilities at Granite
City, Illinois, operated on a lease arrangement during
most of the postwar period by the Granite City
Steel Company, are to be enlarged. A steel foundry
built during W orld W ar II adjacent to the Scullin
Steel Mill in St. Louis, and idle since 1945, also has
been brought back into production.
The Government also has reactivated and ex­
panded a number of its non-industrial installations
in the district. An incomplete tabulation based on
newspaper reports indicates that expenditures for
these purposes will total between $50 and $60 mil­
lion. Installations already reopened or scheduled
for use are Camp Chaffee near Fort Smith,
Arkansas, Fort Leonard W ood and Camp Crowder
in Missouri, and Camp Breckenridge in Kentucky.
The Navy installation at Millington, Tennessee, is
being expanded and the number of personnel being
handled at Camp Campbell, Kentucky, also has
increased. At Scott Field, Illinois, additional facili­
ties are under construction, and in St. Louis a $25
million Army Records Center is being built.
These expenditures directly affect local areas • • .
As these installations increase in size, substantial
amounts of money flow into the adjoining communi­
ties in the form of payrolls and as a result of local
purchases of goods and materials. The payrolls and
local purchases at Millington, for example, are
expected to total some $25 million this year, or 25
per cent larger than in the last fiscal year. Other
military installations in the Memphis area expect
to spend upwards of $15 million locally as against
$10-$12 million last year. The monthly payroll at
Camp Chaffee has been reported at about $1 million
a month.
. . • particularly the smaller areas .

In the communities where military installations
have been expanded or reactivated and where a
construction program is under way or projected, it
is having a definite effect on the economic life of
the particular communities.
The impact of these defense expenditures shows
up in the statistics. The increased volume of trade
in Paducah is reflected in the fact that since Janu­
ary, when the hiring of construction workers began
in earnest, debits to deposit accounts have shown an
increase over the previous year that is substantially
larger, percentagewise, than that for the district as
a whole. In the first four months, debits volume in
Paducah was up 37 per cent as against 24 per cent
in the whole district. In March and April the
Page 77

increase in Paducah amounted to 45 per cent com­
pared with districtwide increases of 23 per cent and
33 per cent.
Loan volume in Paducah is up considerably more
than the average for the district since last year.
The same is true of total deposits, and particularly
true with respect to Government deposits.
Labor requirements fo r construction and
production are being met without much
difficulty . . .
Some of these projects require large construction
forces. The three parts of the atomic energy devel­
opment at Paducah, as noted, will require about
19.000 workers. So far, little serious difficulty has
been experienced in recruiting the necessary labor.
Hiring began in January and currently about 4,0005.000 workers are employed.
Recruitment of personnel at plants being reacti­
vated also has been accomplished without much
trouble. At the Chevrolet shell plant in St. Louis,
for example, many of the personnel hired there were
previously employed at the company’s automobile
assembly plant in St. Louis. They had been re­
leased when production was cutback there. In
other cases, too, workers have been available for the
jobs, either locally or as a result of in-migration to
the locality.
. . . but housing constitutes a problem in som e
smaller areas • • •

One of the immediate results of the increase in
local area employment, of course, is a sharp increase
in the demand for housing facilities. At Paducah,
officials have estimated that approximately 1,000
new dwelling units will be needed to house the
permanent operating personnel of the Atomic
Energy Commission plant. This area, as well as
the community adjacent to Fort Leonard W ood, has
been declared a defense area and credit restrictions
have been lowered in order to facilitate the con­
struction of housing.
. . . as does other necessary community
facilities.
In addition to housing problems, most of these
communities are faced with the prospect of provid­
ing adequate educational and other facilities re­
quired by a suddenly enlarged population. And the
impact doesn’t stop there. From western Ken­
tucky come reports that the Paducah projects are
likely to affect agricultural crops in the area. Faced
with the possibility of farm labor shortages, some
farmers are shifting crops this year to those which
require the least hand labor.
Page 78




Defense requirements were superim posed on
high level o f civilian demand.
The point has been made that prior to Korea
civilian demand was at a very high level. Military
requirements were a factor in the picture even then
but they were relatively small and accounted for a
relatively minor part of the inflationary pressures
existing at that time. When the international situ­
ation took a turn for the worse, the military pro­
gram was expanded. But, as noted, during most of
the period since last June the defense program has
had a greater impact on the economy as a result of
what it caused private citizens to do with their
money than as a result of the increase in defense
expenditures as such. That situation will change
as the defense program accelerates.
The war situation stimulated private spending
fo r current consumption and inventories.
The immediate effect of the situation in the Far
East was most pronounced in terms of consumer
spending. Heavy spending by consumers encour­
aged retailers to increase their buying. The chain
effect carried on back to manufacturers and sup­
pliers. The net result was a steady increase in pro­
duction, employment and income. And when that
income was supplemented by the use of credit and
past savings to finance purchases, there was a sub­
stantial increase in the existing inflationary pres­
sures.
It also encouraged private capital investment in
plant and equipment.
The Far Eastern situation also provided a stimu­
lus to private expenditures for capital equipment.
In part this reflected the conviction that with costs
increasing, such expenditures would buy more plant
and equipment then than later. In part it was
based on the fear that materials and equipment
might become scarce at a later date. And in addi­
tion it reflected expansion of capacity as a direct
result of the defense program. Actually, as noted,
the realized impact of the latter type of expansion
will become considerably greater during the re­
mainder of the year and in 1952.
In this district sizable private capital expenditures
got under way or were projected. Since last June,
34 projects costing $1 million or more, with an
aggregate estimated cost of $520 million, have been
reported. The relationship of these expansions to
the defense program is not always clearly defined.
In some cases, perhaps, the outlays would have
been made regardless of the current international
situation. In others, the expansion is directly re­
lated to the defense program. Between January 15

and May 11 the Defense Production Administration
approved necessity certificates requested by district
firms covering $140 million of plant and equipment,
a figure which represents only the amount wholly
or partly eligible for amortization in a five-year
period and not the total cost of the projects.
One result o f increased activity has been growing
shortages o f materials.
Not all of the private investment of $520 million
is scheduled for 1951; in some instances the
amounts represent five-year programs. But the pro­
grams now under way have resulted in a larger total
demand. So has the increased spending for current
consumption. This larger demand has created some
problems for producers. One is growing shortages
of certain materials.
The defense program puts relatively heavy pres­
sure on the supply of certain materials, particularly
metals. So far the military take of steel, copper,
aluminum and the like has been comparatively
small. But already reports from various parts of
the district indicate that some manufacturers, usu­
ally small-scale producers, are experiencing difficul­
ties in obtaining sufficient supplies. These reports
indicate that some firms with defense contracts as
well as those whose output is still largely for the
civilian market are having trouble locating the
necessary materials.
There are reports, too, that projected cutbacks in
production of civilian-type goods are not always
readily offset by either prime or subcontracts. The
complaint is voiced fairly frequently, and again




largely by the small producer, that the recipients
of prime contracts are slow in subcontracting for
components of major items. T o the degree that
this situation exists it probably reflects the fact that
restrictions on materials supply have taken hold
faster than the machinery for letting prime and
subcontracts has been able to function.
Other problem s also have arisen . . .
Problems of a more general nature also are antici­
pated. Some of the district areas, where population
increases have outrun the growth in job opportuni­
ties, once more are facing an accelerated rate of out­
migration. Earlier this year a study of the impact
of the defense program was made by the University
of Arkansas in cooperation with the Arkansas Eco­
nomic Council-State Chamber of Commerce. This
survey disclosed that again, as in W orld W ar II,
the smaller cities and rural areas are losing work­
ers to the industrial centers. Such population shifts
have longer-run as well as immediate implications.
• . • and the outlook is fo r m ore problem s as
the defense program climbs to its peak .

Problems of this sort are inherent in an economy
geared to war goods production. And when the
economic machinery is operated on the present
basis of part-war, part-peace, the complexities and
difficulties increase. They can be minimized only
if the policy makers are most skillful and enjoy the
whole-hearted cooperation of all the people.
Weldon A. Stein

Page 79

Survey of Current Conditions
Eighth District economic activity in April and
early May continued to move on a high plateau.
This sideways movement has been characteristic of
both district and nation since early 1951, and reflects
the action and interaction of a combination of fac­
tors. Am ong these are: (1) relatively favorable
progress of the war in Korea, (2) reductions in
consumer demand which had been abnormally high
in the second half of 1950 due in part to fear of
future shortages, (3) more restrictive monetary and
credit policy, and (4) the growing impact of direct
economic controls. W hile the economy still is
mainly a civilian economy, it is going through a
period of general adjustment to a situation in which
the military defense program will play a signifi­
cantly larger part.
Industrial output in the district in April was
running at a rate, after rough adjustment for sea­
sonal factors, just slightly higher than in January.
That rate was well ahead of the comparable period
last year. In this district April output apparently
was off a little from March, but in early May there
were indications of some pickup in activity. Nation­
ally industrial production (seasonally adjusted) in
April was about the same as in March and just
above the January level. Defense orders are flow­
ing out into industry in increasing volume but their
full impact still lies in the future.
Total new construction activity has been increas­
ing more than seasonally and in April the value put
P R IC E S
W H O LESA LE PRICES IN T H E U N ITED STATES
Bureau of Labor
April, 1951
Statistics
compared with
(1926=100)
April, *51 March/51 April,*50 March/51
April/50
All Commodities.... 183.5
184.0
— 0.3%
+ 20 .0 %
152.9
203.8
Farm Products... 202.6
159.3
— 0.6
+27.2
Foods................ 185.7
-0 +19.6
186.6
155.3
172.4
146.4
— 0.2
+17.6
CONSUMER PRICE IN D E X *
Bureau of Labor
April 15,1951
Statistics
April 15, March 15, April 15,
compared with
(1935-39=100)
1951
1951
1950 March 15/51 April 15/50
184.6
United States......
184.5
168.5
+ 0 .1 %
+ 9 .6 %
•New series.
R E TA IL FOOD*
Bureau of Labor
April 15,1951
Statistics
April 15, March 15, April 15,
compared with
(1935-39=100) 1951
1951
1950 March 15/51 April 15/50
U . S. (51 cities)...,225.7
226.2
197.3
— 0.2%
+ 14.4%
239.4
— 0.8
+17.3
202.6
Little Rock.— ..224.9
226.8
195.6
— 0.8
+15.0
Louisville....... . ..212.5
214.6
183.1
— 1.0
+16.1
Memphis.............232.9
233.8
203.4
— 0.4
+14.5
*New series.

Page 80




in place was larger than in any previous April on
record. The gain from a year ago, however,
reflected mainly price advances. New residential
building, in terms of number of starts, has been
below last year’s volume for the past three months,
and in April the number of starts was down from
March, an unusual occurrence.
Employment has risen sharply since last June.
Since the first of the year the increase has been
mainly seasonal in character but, combined with
the rise in the armed forces, has resulted in some
further tightness in the labor market. Currently,
both district and national employment are well
above year-ago levels.
Credit restriction, reflecting both Federal Reserve
action and the Voluntary Credit Restraint Program,
has succeeded in holding down growth in private
has contributed materially to holding down growth
in private credit during the past few weeks.
Nationally, bank loan volume leveled off in April.
In this district loans have shown some decline.
The underlying trend in the economy, however,
still seems to be on the inflationary side. Despite
rising inventories, lagging consumer buying, a slow
down in residential building, and rumors of an early
peace in Korea, inflation remains the basic domestic
economic problem. Unless there should be a sub­
stantial cutback in scope and timing of the defense
program, that problem will continue in the future.
The volume of spending and of actual work per­
formed under the defense program is expected to
increase sharply during the balance of 1951. As
the defense take rises, the inflationary problem is
likely to be intensified and it is important to con­
tinue effort to hold it within bounds.
W H O L E S A L IN G
Line of Commodities
Data furnished by
Bureau of Census,
U.S. Dept, of Commerce*
Drugs and Chemicals......... .
Dry Goods.........~«...................
Groceries..................................
Hardware....... .........................
Tobacco and its Products......
Miscellaneous..........................

Net Sales________
April, 1951
compared with
March, 1951 April, 1950
— 14%
+ 9%
— 9
+ 18
— 11
+ 31
— 9
+ 5
— 12
+ 25
+ 8
— 1
+21
— 9

•♦Total All Lines...............
•Preliminary*

••Includes certain items not listed above.

+ 19%

Stocks
April 30, 1951
compared with
April 30, 1950
+22%
+ 11
+50
+28
+24
+ 25
+48
+35%

EM PLOYM ENT

Employment in the Eighth District and in the
nation remained relatively stable between March
and April. Total employment was at the highest
April level on record, although still below the alltime peak reached late last summer. Unemploy­
ment in April was lower than at any time since late
1948.
The labor market is becoming tighter in both
district and nation as the armed forces and indus­
try continue to expand. Tightening is evidenced
by the drop in unemployment, by higher quit rates
among workers, by a longer work week, and by diffi­
culties in recruiting experienced workers.
A temporary easing is expected in June when
school graduates and summer workers seek jobs.
This year’s high school and college graduates have
a rosier outlook than last year’s graduates. Jobs
are more plentiful and beginners’ salaries are higher
than a year ago. Chemists, engineers, physicists,
stenographers and typists are most in demand. In
sharp contrast with last year, graduates of draft age
are being hired by many of the larger firms. Stu­
dents seeking summer work will find more employ­
ment opportunities than last summer. The 1951 job
market is reported to be one of the best since the
end of W orld W ar II.
Manufacturing employment in March in six dis­
trict states (data for Mississippi are not yet avail­
able) was only slightly larger than in February but
was 11 per cent higher than a year ago. For the
nation the gain over the year was 13 per cent.
Illinois and Tennessee had a 9 per cent, Missouri
a 10 per cent, Arkansas a 13 per cent, Kentucky a
14 per cent, and Indiana a IS per cent increase in
manufacturing employment since March, 1950.
Total nonagricultural employment in the district
states in March was about 7 per cent above last
year.
Unemployment in the seven district states, as
measured by claims for unemployment compensa­
tion, showed little change between early March and

April. The April figure was about half the year
ago level. In Evansville, St. Louis and Little Rock
the claims load was about the same in April as in
March.
IN D U S T R Y

Eighth District industry in April moved at a
slightly slower pace than in March. In the aggre­
gate manufacturing activity was a little higher,
although some important lines registered small
declines. Preliminary indications were that pro­
duction increased in May. Mining and transporta­
tion activity was down from March. Since April
had one less working day than March, and the rate
of output was down slightly, total industrial out­
put in the month was off from March, but was well
above that of April, 1950.
Industrial power consumption in the major dis­
trict cities in April was up 6 per cent (daily average
basis) from March and 11 per cent larger than in
April, 1950. Increases for the month were reported
in St. Louis and Louisville; decreases were regis­
tered in Memphis, Little Rock and Evansville.
Without adjustment for differences in number of
working days power consumption in April was only
1 per cent ahead of March.
The Terminal Railroad Association of St. Louis
reported approximately 120,000 load interchanges
in April, about 10 per cent less than in March, but
9 per cent more than in April, 1950. Oil production
was down slightly from March, and was less than
a year earlier. Coal output was off substantially as
compared with both a month and a year earlier.
IN D U S T R Y
C O N S U M P T IO N

April,
1951
(K .W .H .
K .W .H .
in thous.)
Evansville......... 15,916
Little Rock..,.... 12,524
Louisville.......... 81,533
Memphis........... 28,706
Pine Bluff.... ..... 9,557

March,

OF

E L E C T R IC IT Y

April,

1951

1950

K .W .H .

K .W .H .

.... 102,359

16,092
12,768
80,710
30,229
7,590
100,352

.... 250,595

247,741

April, 1951
compared with
March, 1951 April, 1950

12,964
11,355 r
72,280
28,610
6,767
83,137 r

— 1. 1 %
— 1.9
+ 1.0
— 5.0
+ 2 5 .9
+ 2.0
+

215,113

+ 2 2 .8 %
+ 10.3
+ 12.8
+ 0.3
+ 4 1 .2
+ 2 3 .1
+ 1 6 .5 %

1. 2 %

r— Revised.

P R O D U C T IO N IN D E X E S

L O A D S IN T E R C H A N G E D

C O A L P R O D U C T IO N IN D E X
1 9 3 5 -3 9 = 1 0 0

Unadjusted
April, 1951 March, 1951 April, 1950
144*

163*

138

Adjusted
April, 1951 March, 1951 April, 1950
2 22*

172*

213

S H O E P R O D U C T IO N IN D E X
1 9 3 5 -3 9 = 1 0 0

Unadjusted
Jan., 1951

Feb., 1950

Feb., 1951

Adjusted
Jan., 1951

Feb., 1950

153

153r

144

144

150R

136

r— Revised.

*— Preliminary.




ST. L O U IS

First Nine Days
Apr.,'51 Mar.,*51 Apr.,*50 May,*51 May,*50 4 mos. *51
119,570
132,803
109,886
34,239
32,334
465,597
Source: Terminal Railroad Association of St. Louis.
C R U D E O IL

(In thousands
ofbbls.)

Feb., 1951

F O R 25 R A I L R O A D S A T

P R O D U C T I O N -D A I L Y

April,
1951
78.2
158.9
27.8
27.4

March,
1951
79.5
164.0
27.0
28.2

April,
1950
80.3
179.5
28.0
25.7

292.3

298.7

313;5

4 mos.*50
418,311

AVERAGE

April, 1951
compared with
March, 1951 April, 19!
— 2%
— 3%
— 3
— 12
+ 3
— 1
— 3
+ 7
— 2%

— 7%

Page 81

The St. Louis basic steel industry scheduled
operations at 90 per cent of capacity in April. This
rate was three points lower than the rate for March,
and operations in the first two weeks of May were
at an average rate of 86 per cent of capacity.
Steelmaking activities, in general, have evidenced
some slackening in recent weeks due, in part, to the
shortage of scrap metal. This shortage may cause
further cuts in output in coming weeks.
District production of southern pine in April was
2 per cent smaller than in March. The index of
average production per mill was 207 in April com­
pared with 211 a month earlier, and 216 in April,
1950. Pine production was increased in the first
week of May, however.
Output of southern hardwood also decreased in
April compared to March. Mills operated at 97 per
cent of capacity in April, 99 per cent in March, and
88 per cent in April, 1950. Operations stepped up
again to 99 per cent of capacity in the first week of
May, 1951.
Shoe production has declined since the first of the
year. The latest available figures cover February,
when district output was off 9 per cent from Janu­
ary and was about the same as in February, 1950.
Nationwide output showed a smaller drop in the
month and remained ahead of the comparable
period in 1950. Declining order volume has
prompted many district manufacturers to plan parttime operations and to schedule vacation periods
earlier than usual. Vacations ordinarily come in
July; this year they are being taken in late May
and in June. Some manufacturers report that
uncertain conditions in the industry will result in
some plants closing for two weeks instead of one.
Livestock operations were heavier in April, re­
flecting in part marketings designed to beat the
cattle price rollback which took effect May 20.
(Marketings fell off substantially following the May
20 date.) In April, livestock receipts at National
Stockyards were 12 per cent larger than in March
and 8 per cent more than in April, 1950.
Forty of Kentucky’s distilleries were in operation
at the end of April, four less than at the end of
March. The amount of bulk whiskey in storage
reached a new all-time high at the end of March,
but most distillers have continued to operate be­
cause restrictions designed to conserve grain may
come in the future.
The United States Brewers Foundation, which
held its 75th trade association convention in St.
Louis in May, reported that first quarter 1951
apparently saw the end of a beer sales decline which
began after the peak year of 1947. Spokesmen
for the industry declared that 1951 sales might be
Page 82




10 per cent above those of 1950. Demand for beer
in recent months has been good, and appears to be
growing—particularly for home sales.
The industry is concerned about possible further
restrictions on cans, rising costs, and proposed addi­
tional taxes. These factors could combine to make
year-end prospects less favorable than they now
appear.
Daily average crude oil production in district
states decreased 2 per cent in April, compared with
March. Daily average output this April was 7 per
cent less than in April a year ago.
New oil explorations have continued in the dis­
trict and in recent weeks a prospective new pool
was opened in Wabash County, Illinois, about
seven miles west of Mt. Carmel. The Zion pool in
Henderson County, Kentucky, has “ stepped out”
another half mile with a new well. This pool now
covers about 3,000 acres. New activity has also
been reported in Knox and Posey Counties, Indiana.
Preliminary data indicate that total district coal
production in April was 16 per cent less than in
March and 13 per cent less than in the same month
of 1950. Month-to-month decreases were recorded
in all district coal producing states except in Mis­
souri where a small increase appeared. From
March to April, national coal production decreased
9 per cent, and was 7 per cent less than a year ago.
Decreases are usual at this time of the year, but a
part of these declines in the district and the nation
reflect large above-ground coal inventories resulting
from uninterrupted production for over a year.
C O N S T R U C T IO N

Total expenditures for new construction put in
place in the nation rose seasonally to $2.4 billion in
April. This was the highest April on record, but
the Departments of Commerce and Labor reported
that at least some types of construction activity
appear to have reached a turning point. For in­
stance, the small increase in the value of residential
building over a year ago was due entirely to higher
construction costs as the physical volume was
beginning to lag behind last year. The number of
C O N S T R U C T IO N
B U IL D IN G

P E R M IT S

M onth of April
N ew Construction
( Cost in
thousands)

Number
1951 1950

Cost
1951
1950

Evansville........ ...
64
69 $
173 $
178
Little R ock...... ...
60
135
447
1,270
Louisville.............. 142
273
1,138
2,265
M em phis........... ...1,857 1,622
2,364
5,236
St. Louis.............. 346
413
1,920
8,525
April Totals.... ...2,469 2,512 $ 6,042 $17,474
M arch T o ta ls ....^ ,044 2,643 $15,579 $11,524

Repairs, etc.
Number
Cost
1950
1950
1951
1951
51
60 $
100 $
80
161
246
271
193
99
92
114
99
98
193
155
225
557
1,398
287
234
831
840

902
846

$2,014
$1,722

$ 966
$1,174

new dwelling units started in April was well below
a year earlier. Construction expenditures for com­
mercial buildings were slightly less in April than in
March, although considerably higher than last
April. Industrial building continued to rise during
April.
The dollar value of contracts awarded in April in
the 37 states covered by the F. W . Dodge reports
was about 8 per cent higher than in March but was
only 2 per cent above a year ago. Residential
awards in April showed a decline over the year and
a very minor gain over March. Nonresidential
contracts, however, were above both the month ago
and the year ago level.
In the Eighth District, $76 million in contracts
were let in April as contrasted with $97 million in
March and $78 million last April. Nonresidential
awards in April were less than the March level by
18 per cent and exceeded the April, 1950 level by
8 per cent. Residential awards, however, were 25
per cent below March and 14 per cent below last
year.
In the St. Louis territory (which includes most of
this district) contracts were awarded for the con­
struction of 1,700 dwelling units during April as
contrasted with 2,700 a year ago. However, during
the first four months of this year 9,000 dwelling
units were contracted for, as compared with 7,900
during the same period last year. All of the in­
crease reflected apartment building; there was a
slight drop in contracts awarded for one- and twofamily dwellings.
Total nonresidential awards in the St. Louis terri­
tory were about 10 per cent higher in the first four
months of this year than in the same period last
year. Considerable declines in commercial, public,
and recreational buildings were more than offset by
gains in manufacturing, hospital and religious build­
ings.
TRADE

Total sales in April at district retail stores were
generally lower than in either March, 1951 or April,
1950. The decline was due mainly to fewer trading
days this April than in March and to an earlier date
of Easter in 1951. On an adjusted basis, sales dur­
ing April probably equaled or slightly exceeded
those last year in most lines. But retailers counted
fewer dollars in April, 1951 and even after adjust­
ment they saw sales running below anticipations.
At district furniture stores sales totaled about the
same as in the previous month and the like month
last year. New and used automobile sales were
reported slow at a time when buying interest nor­
mally builds up seasonally.
Lagging sales of
television receivers were cited as the major factor




TRADE
DEPARTM ENT STORES
Stocks
Stock
Turnover
________ N et Sales s ____________ on H and
S a le
April,, 1951
A p r i l/51
Jan. 1, to
4 m os.’ 51
ed with
to same comp, with
April 30,
1950
1951
A p r i l/50 period *50 A p r il/5 0
1.22
8th F . R . District...— 6 °/
+ 32%
1.04
— 4%
+ 10%
1.17
Ft. Smith, A rk .1.....— 18
+ 16
+ 41
1.05
— 6
1.20
Little Rock, A rk....— 4
+ 23
— 8
+ 6
1.01
Quincy, 111................— 8
— 6
+ 16
+36
1.04
Evansville, In d ...... .— 3
1.07
+ 2
+ 18
+ 46
.95
Louisville, K y ......... — 4
1.33
— 6
+ 22
+ 10
1.20
1.24
St. Louis Area 2..... — 7
+ 40
— 3
+ 10
1.01
St. Louis, M o.....— 8
1.21
.98
— 4
+ 9
+ 40
1.03
Springfield, M o ..... .— 8
— 14
+ 7
+ 25
.87
1.23
Memphis, Tenn...... — 10
— 4
+ 9
+ 15
1.20
*A11 Other C ities..«+ 4
.91
+22
.83
+16
— 4
*
Fayetteville, A rkan sa s; H arrisburg, M t. Vernon, Illin o is; Vincennes,
Indian a; Danville, Hopkinsville, M ayfield, Paducah, K en tu c k y ; Chillicothe, M issouri; Greenville, M ississippi; and Jackson, Tennessee.
1 In order to permit publication of figures for this city, a special sample
has been constructed which is not confined exclusively to department
stores.
Figures for any such nondepartment stores, however, are not
used in computing the district percentage changes or in computing depart­
ment store indexes.
2 Includes St. Louis, Clayton, M aplewood, M issou ri; Alton and B elle­
ville, Illinois.
Outstanding orders of reporting stores at the end of April, 1951, were
18 per cent greater than on the corresponding date a year ago.
Percentage of accounts and notes receivable outstanding April 1, 1951,
collected during April, by cities:

1.00

Instalment Excl. Instal.
Accounts
Accounts
Fort Smith...........%
Little Rock.... 16
Louisville...... 19
M emphis......... 18

44%
49
48
39

.

Instalment Excl. Instal.
Accounts
Accounts
Q uincy...........
St. L ouis......
Other Cities..
8 th F .R . Dist.

22%
19
11
18

IN D E X E S O F D E P A R T M E N T S T O R E SA L E S A N D
8th Federal Reserve District
A p r.,
1951
304
Sales (daily average), unadjusted 8...............
320
Sales (daily average), seasonally adjusted 3
437
437
3 D aily average 1 9 3 5 -3 9 = 1 0 0 .
4 End of M onth Average 1 9 3 5 -3 9 = 1 0 0 .

M ar.,
1951
298
298
413
425

62%
52
50
49

STOCK S
F eb.,
1951

A p r.,
1950

275
327
371
412

316
319
329
329

SPECIALTY STORES
Stocks
on H and

N et Sales

April, 1951
4 mos. *51 A pr. 3 0 /5 1
compared with
to same comp, with
M a r ./5 1 A p r ./5 0 period *50 Apr. 3 0 /5 0
M en’ s Furnishings.......
Boots and Shoes............

— 28%
— 30

— 25%
— 24

+
+

4%
6

+48%
+27

Stock
Turnover
Jan. 1, to
April 30,
1951 1950
.63
1.24

.81
1.40

Percentage of accounts and notes receivable outstanding April 1, 1951,
collected during A p ril:
M en’s Furnishings ..................
42%
B oots and Shoes.......................
41%
Trading days: April, 1951— 2 5 ; M arch, 1951— 2 7 ; April, 1950— 25.

RETAIL FURNITURE STORES
N et Sales

Inventories

Ratio

April, 1951
April 30, 1951
of
compared with
compared with
Collections
M a r ./5 1 A p r .,’ 50 M ar. 3 1 /5 1 A p r. 3 0 /5 0 A p r ./5 1 A p r.,*50
-o -%
+ 25%
26%
25%
— 1%
8 th Dist. T o ta l1... + 1 %
53
+ 18
+ 12
51
+ 3
St. Louis Area 2... + 1
55
52
+ 18
+ 15
+ 3
St. Louis............ + 2
14
— 6
+ 40
— 6
16
+ 15
13
+ 41
— 6
— 7
15
+ 16
+ 40
14
13
— 23
+ 1
+ 11
+ 9
18
17
— 28
— 19
+ 11
Little Rock...
— 3
16
+ 4
+ 35
— 7
18
Springfield....
*
*
*
*
— 11
— 16
Fort Smith...
*N o t shown separately due to insufficient coverage, but included in
Eighth District totals.
1 In addition to following cities, includes stores in Blytheville, Pine
Bluff, Arkansas; Hopkinsville, Owensboro, K en tu ck y; Greenwood, M is ­
sissippi; Hannibal, M issouri; and Evansville, Indiana.
2 Includes St. Louis, M issou ri; and A lton , Illinois.
3 Includes Louisville, K e n tu c k y ; and N ew Albany, Indiana.

PERCENTAGE D ISTRIBU TIO N OF FURNITURE SALES
A p r il/5 1

M a r ch /5 1

Cash Sales ................................................................
Credit Sales ...........................................................

14%
86

14%
86

A p r il/5 0
14%
86

Total Sales .........................................................

100%

100%

10 0 %

Page 83

for lower volume by appliance dealers. The early
Easter and weather which was too cool for the
sale of seasonal clothing during most of April, con­
tributed to the sales decline at department and
specialty stores.
In view of smaller than expected sales, inven­
tories held by district retailers on April 30 were
seen as “ uncomfortably” heavy in many lines.
Department store, men’s store, and furniture store
inventories were substantially larger than a year
ago. W om en’s specialty shops, where the accent is
on seasonal merchandise, reported inventories only
slightly larger than a year ago. Inventory prob­
lems of many car dealers have been aggravated by
steady delivery of new cars from manufacturers.
At the used car lots, late model used cars sold
slowly, with buying interest centering on early post­
war and prewar models. And appliance and furni­
ture stores, with little storage space remaining,
obtained “ sudden” delivery of almost any line of
merchandise.
The ability of the retailer’s supplier, in both hard
and soft lines, to fill orders with little difficulty has
resulted in some cutback in volume of forward buy­
ing. In fact, a few lines report no orders for future
delivery of merchandise. “ Allotments” of unwanted
goods in excess of needs, as gauged by current sales
levels, are being made in several lines.
The trade picture has been further confused by
the “ shortage of shortages” . Manufacturers in­
creased production substantially early in the year
both in view of retailers’ demands for merchandise
and in view of anticipated future shortages. As
sales failed to gain from the January-February level,
the pipe lines of supply became filled. Retailers all
feel that shortages will come in the future but many
believe it undesirable to add to already large inven­
tories, partly because of storage space problems,
partly because of tighter financing.
Department Stores— Sales for the month of April
totaled 6 per cent less than those in March and were
4 per cent under those in April, 1950. On a sea­
sonally adjusted and daily average basis, however,
April sales were higher than a month and a year
earlier, 320 per cent of the 1935-39 average as com­
pared with 298 in March and 319 in April, 1950.
The retail value of inventories held by district
department stores on April 30 increased 2 per cent
from that on March 31, and was 32 per cent larger
than on April 30, 1950. The value of outstanding
orders at the end of April was about one-third less
than a month earlier but was almost one-fifth larger
than a year ago.
The sobering possibility that sales might not
expand very much and could drop below present
Page 84




levels has accentuated the “ uncomfortable” feeling
retailers have about current inventories. The rec­
ord of sales and inventories by major divisions of
St. Louis department stores indicates that inven­
tories throughout the entire store generally are high
relative to current sales. Piece goods and house­
hold textile sales were 7 per cent larger in April,
1951 than a year ago, but inventories were 26 per
cent larger. Small wares sales were only slightly
higher than last year, but inventories were onethird higher. In the women’s apparel division sales
were off slightly and inventories were up about onefifth. Men’s wear sales dropped 18 per cent and
inventories increased 38 per cent. House furnish­
ings divisions’ sales totaled 5 per cent larger, while
inventories were 52 per cent more than a year
earlier.
Specialty Stores— St. Louis women’s specialty
store sales volume during April was one-fourth
smaller than in March and about one-sixth below
that in April, 1950. An early Easter this year and
very few clearance sales are given as the major
factors in the year-to-year decline. Inventories
were 8 per cent smaller than a month earlier but
were 8 per cent higher than last year.
Men’s apparel store volume in the district during
April was 28 per cent smaller than in March and
25 per cent below April, 1950. The retail value of
inventories on April 30 was up 8 per cent from
March 31 and was 48 per cent larger than on April
30, 1950.
Furniture Stores—April sales volume for the dis­
trict totaled about the same as in March, 1951 and
in April, 1950. Inventories at the end of April were
about the same as a month earlier but were onefourth larger than a year ago.
A G R IC U L T U R E
CASH FARM INCOM E
M arch, 1951
(I n thousands
of dollars)
....
....
M ississippi... ....
M issouri....... ....

M arch,
1951

3 month total Jan. to March

compared with
Feb.,
M arch,
1951
1950

$ 29,507 4 * 3 3 %
150,057 + 2 2
28,144 - 0 26,356 - 0 79,793 + 1 8

T o ta ls....... ..... $428,406 + 1 9 %

1951
87,945
429,547
232,399
151,407
89,510
241,031
102,347

+ 58%
+ 16
+ 24
+ 20
+ 119
+ 30
+ 36

$

+

$1,334,186

28%

1951
compared with
1950
1949
— 28%
+ 36%
+
4
+
7
+ 19
+ 15
—
4
+
1
— 44
+ 118
+ 26
+ 16
- 0+ 13
+

17%

—

2%

RECEIPTS AN D SHIPM ENTS A T N A T IO N A L STOCK YARDS
Receipts__________
April, 1951
April,
compared with
1951 M arch,*51 A p ril,150
’
Cattle and calves.,.. 74,992
.3 1 7 ,2 3 3
.. 39,385
.4 3 1 ,6 1 0

+
9%
+
5
+ 131

— 11%
+22
— 29

+

+

12%

8%

Shipments
April, 1951
compared with
A pril,
1951 M a r c h /51 A p ril,'50
+ 17%
— 9%
24,419
2
+ 8
68,540 —
+302
- 14
—
29,529
+ 25%
— 2%
122,488

A G R IC U L T U R E

Prospects for spring sown crops in the Eighth
District were favorable at the middle of May. Up
to the last week of April weather had been gener­
ally unfavorable and field work and planting were
two or three weeks late. But in the last week of
April and the first two weeks of May good weather
permitted farmers to do considerable catching up.
By mid-May practically all cotton had been
planted and many of the fields were up to good
stands. Chopping was general in many areas. The
bulk of the spring plowing was completed in Mis­
souri, Illinois and Indiana, and com planting was
well under way. Some acreage originally intended
for oats was shifted to soybeans or corn.
Prospective wheat production in district states
still is estimated at more than the 1950 harvest.
However, the 2 per cent increase now forecast is
substantially less than the increase estimated as of
December, 1950. The Illinois crop is expected to
be nearly a third larger than in 1950. Small in­
creases are expected in Missouri and Arkansas, the
only two district states in which wheat conditions
improved between December and May.
Nationally the size of the winter wheat crop on
May 1 was estimated at 682 million bushels, a de­
cline of 217 million bushels from the first estimate
and 9 per cent less than the crop of 1950. Sub­
stantially smaller crops than in 1950 are expected
in Texas, Kansas, and Nebraska. The smaller
winter wheat production will be offset to some
extent by larger spring wheat acreages.
Prices received by farmers declined slightly in the
month ending April 15 for the second month in suc­
cession. On that date the index was 309 (1910-14=
100) compared with 311 in March and 313 in Febru­
ary. Prices for truck crops, dairy products, wool,
fruit and eggs all were lower than at mid-March.
Prices paid by farmers continued to edge upward.
The index on April 15 was 283 compared with 280
in March and 276 in February. Thus, the parity
ratio has narrowed from 113 in February to 109 in
April.

district farm land values were up 16 per cent. The
percentage increase for the district exceeded the
increase nationally, both for the four-month period
and for the year. Am ong district states, the great­
est increase in farm real estate prices during the
year was in Indiana (20 per cent).
The proportion of farm sales involving credit for
the year ending March, 1951 was little changed
from the previous year, but the proportion (60 per
cent) is appreciably larger than in 1948. The volume
of sales was up slightly from the previous year.
B A N K IN G A N D F IN A N C E

Nationally bank loan volume leveled off in April
in contrast to a slight gain occurring in April, 1950.
The more restrictive credit policy of the Federal
Reserve and the Voluntary Credit Restraint Pro­
gram were factors in the moderation. Bank loans,
however, were up $9.5 billion from the pre-Korea
level.
In this district, total loans declined in April at
member banks. The drop was $10 million, slightly
smaller than the usual seasonal decline at this time
of year. Loans at the large city banks declined $18
million, but this was offset in part by an increase in
lending at smaller (mostly rural) banks. Typically
the district’s city banks show a decline in April and
the country banks an increase. This April the rise
in loan volume at the smaller banks was appreci­
ably larger than last April, reflecting mainly heavier
financing demand for farm production. The de-

FARM LAND V AL U E S ARE UP SHARPLY
Increase
Increase
Increase
Nov., 1950
March, 1950
1935-39
to March, 1951 * to March, 1951 to March, 1951
+ 15%
+ 20 5 %
Arkansas................................. + 11%
Illinois..................................... + 8
+17
+178
Indiana.................................... + 10
+ 20
+203
K entucky....................... ...............+

+ 1 4

+222

Mississippi.................. ........... + 12
+15
Missouri.................................. + 9
+17
Tennessee................................ + 5
+11
Eighth District.......................+ 9
+16
United States..........................+ 8
+14
1 Preliminary, 1912-14=100.
Source: BAE, The Farm Real Estate Market.

+189
+145
+197
+180
+133

8

Farm real estate prices in the Eighth District
increased 9 per cent in the four months, November,
1950 to March, 1951. For the year ending in March




Page 85

crease at the bigger city banks was just slightly less
than normal and reflected in large measure liquida­
tion of loans on cotton at Memphis banks. Real
estate loans increased at the city banks; consumer
and security loans dropped. In early May loans at
weekly reporting banks in this district fell another
$6 million.
Investments fell $23 million in April at all dis­
trict member banks. Most of the drop ($20 million)
was in Government securities. Three-fourths of the
net sales of Government obligations were from the
portfolios of smaller banks.
Demand deposits declined in April, while time
deposits rose. However, the growth in time de­
posits was less than the average gain for the month
during the previous five years, and such deposits at
the close of April were still $15 million below a year
earlier.

Debits— Rate of use of bank funds continued high
in April. Debits to deposit accounts at the 22 cities
in the Eighth District were $3.8 billion in April, up
21 per cent from April, 1950. March, 1951 debits
were 23 per cent over their year-ago volume.
Nationally, debits in leading cities in April were 25
per cent higher than April a year ago.
D E B IT S T O D E P O S IT A C C O U N T S

SELECTED

AND

M ar., 1951 A p r., 1950
to
to
A p r., 1951 A p r., 1951 A p r., 1951

$ + 108

$2,328

$— 26

82

$1,650

+ 370
— 252
— 10
+ 131

1,252

— 18

+ 289

607

903
173

—
—

5
3

— 191

855

—

16

188

814
438
376

+
—

7
1

+ 107

475
236

b. Other Cash Balances 3.....................................
3. Other A ssets...............................................................

+ 21%

Change from

M ar., 1951 A p r., 1950
to
to
A p r., 1951 A p r., 1951 A p r., 1951

— 10

674
615
47

— 10 %

Smaller Banks 2

Largre City Banks 1
Change fro m :

$— 33

a. Reserves with the F .R . B ank......................

33
9
19
8
12
12
8
13
10
11
16

L IA B IL IT IE S

1. Loans and Investm ents.........................................

— 20
— 3

—
—
—
—
—
+
—
—
—
—
—

+ 13%
+ 23
+ 19
+ 19
+ 27
+ 19
+ 20
+ 36
+ 19
+38
+ 28
— 1
+45
+ 18
+ 14
+ 15
+ 3
+ 24
+ 8
+ 16
+ 14
+ 5

GROUPS

Assets

1,758
361

11%
8
20
4
9
7
16
9
14
2
9

D IS T R IC T

ASSETS

M ar., 1951 A p r., 1950
to
to
A p r., 1951 Apr., 1951 A p r., 1951

c. Other Securities.................................................
2. Reserves and Other Cash Balances.................

—
—
—
—
—
—
—
—
—
—
_

Totals............................ $3,817,781 $4,214,210 r $3,160,725

Change fr o m :

a. Loans......................................................................
b. U .S . Government Obligations.................... ......

April, 1951
compared with
M arch,’ 51 A p ril,’ 50

*These figures are for Texarkana, Arkansas, only,
Total debits for
banks in Texarkana, Texas-Arkansas, including banks in the Eleventh
D istrict, amounted to $30,255.
R Revised.
—

A ll Member
( I n M illions of Dollars)

April,
1950

25,485 $
28,457 $
22,571
43,768
47,649
35,594
7,053
8,844
5,906
145,306
151,872
121,998
28,326
31,113
22,317
13,211
14,152
11,056
26,881
31,843
22,439
126,934
138,848
93,390
32,594
37,996
27,358
Evansville, In d ............. ..
140,748
143,416
102,095
Louisville, K y ...............
612,593
672,010
478,961
Owensboro, K y .............
31,210
46,312
31,523
Paducah, K y ................. .
19,144
21,067
13,166
Greenville, M iss...........
19,198
23,691
16,321
Cape Girardeau, M o ...
12,517
13,583
10,964
Hannibal, M o ................
8,864
10,045
7,707
Jefferson City, M o ......
52,846
47,043
51,270
St. Louis, M o ................ . 1,783,884 1,938,090 r 1,438,939
Sedalia, M o ....................
10,202
11,734
9,485
Springfield, M o .............
62,684
69,432
54,073
Jackson, Tenn...............
19,634
21,916
17,290
Memphis, Tenn............
594,699
705,097
566,302

E IG H T H

BY

March,
1951

E l Dorado, A r k ............ ..$
Fort Smith, A r k ...........
H elena, A r k ........... ........
Little R ock, A r k .......... ..
Pine B luff, A r k ............
Texarkana, A r k .* ........
Alton , 111..........................
E .S t .L .-N a t .S .Y ., 111. ..

Loans to Farmers— Since Korea there has been
an increase in total loans to farmers in the Eighth
District. Between June 30, 1950 and April 9, 1951
call report dates, production loans to farmers rose
from $89 million to $100 million. Offsetting this
rise was a decline of $10 million in bank loans to
farmers guaranteed by the Commodity Credit Cor­
poration as farm commodity prices rose above guar­
anteed levels. During the same period real estate
loans secured by farm land increased from $35 mil­
lion to $39 million.

M EM BER BAN K

A pril,
1951

(I n thousands
of dollars)

+
+

9
1

+

8

+ 111
+ 20

+

1

+

6

30

+ 8
- 0-

$+

+
+
+

$—

7

+ 8
— 15

$+
+
—

- 0+ 2

+
+

+ 2
- 0-

+
—

26
81
61
6
24
36

75
32
3

239
17

+

1

+

12
3

,

$5,314

$— 23

$ + 245

$3,172

$— 19

$ + 192

$2,142

$—

4

$+

53

5. Gross Demand D eposits........................................ ,,,

$3,945

$— 27
— 19

$ + 222

$2,440

$— 21
— 18

$ + 181

$1,505
32

$—
—

6
1

&
+
—

41

1,473
488
6

—
+

5
3

+
—

2
43
4

- 0— 1

+
+

15

$+

53

4. Total A ssets................................................................
Liabilities and Capital
a. Deposits of B anks............................ ................

b. O ther Demand D eposits................................ ......
6 . Tim e Deposits........................................................... .

11

560

—

3

+

2

+ 190
— 11

—
+

1
1

+
+

3,353

—

8

+ 233

978

+
—

5
1

—

15

1,880
490

+
+

11
27

43
199

$ + 245

$3,172

7. Borrowings and Other Liabilities.....................

49

8 . Total Capital Accoun ts.........................................

342

- 0-

$5,314

$— 23

9. Total Liabilities and Capital Accounts.......... ......

—

$— 19

—

9

10
12

$+192

143
$2,142

$—

4

1 Includes 15 St. Louis, 6 Louisville, 3 Memphis, 3 Evansville, 4 Little Rock and 4 East St . Louis-'Natiomal Stock Yards, Illinois, banks.
2 Includes all other Eighth D istrict member banks.
Some of these banks are located in smaller urban centers, but the majority are rural area banks.
3 Includes vault cash, balances with other banks in the United States, and cash items reported in process of collection.

Page 86




1

National Summary of Business Conditions
Output and incomes were generally maintained
in April and May, reflecting in part a further ex­
pansion in Federal defense activities. Consumer
demands for most durable goods slackened further,
and total value of retail sales was only moderately
above year-ago levels. Wholesale commodity prices
decreased slightly in May and common stock prices
showed fairly marked declines. Bank loans to busi­
ness have shown little change since early April.
Industrial Production— Output at factories and
mines in April, as measured by preliminary figures
for the Board’s seasonally adjusted index, was 222
per cent of the 1935-39 average, the same as March.
Not much change in this level is indicated in May.
The current level of industrial activity is about 15
per cent higher than a year ago.
Production of durable goods showed little change
in April as output of industrial equipment increased
somewhat less than in other recent months; passen­
ger car assemblies decreased 15 per cent; and pro­
duction of furniture, television sets, and most other
household durable goods was reduced. Output of
metals and most building materials was maintained
at or above earlier advanced rates. Activity in the
aircraft industry showed a further marked expan­
sion.
Output of most nondurable goods was maintained
in April. Production of chemicals expanded further
reflecting mainly increased output of synthetic
rubber and other industrial chemicals. Activity in
the cotton textile industry decreased owing in part
to a labor dispute which was terminated in early
May.
Crude petroleum output expanded to new record
levels in April and early May, and production
of anthracite rose substantially from the reduced
March rate. Metal mining increased as iron ore
production rose more than seasonally.
Employment— Total employment in nonagricul­
tural establishments in April, seasonally adjusted,
showed a smaller gain than in other recent months.
Employment in defense and related activities con­
tinued to increase, while employment in consumer
goods industries showed moderate declines. Aver­
age wage rates at manufacturing plants rose fur­
ther. Unemployment declined to 1.7 million, one




of the lowest levels reached in the past decade
except for the war years.
Construction—Value of construction contract
awards increased seasonally in April, reflecting
chiefly gains in most types of private nonresidential
awards. Total awards in May are likely to increase
further because of a very large contract issued by
the Atomic Energy Commission. The number of
housing units started in April showed a contraseasonal decline to 88,000, as compared with 93,000
in March and 133,000 in April 1950.
Distribution— Total retail sales decreased further
in April. In the early part of May, department
store sales of durable goods slackened somewhat
further, while sales of apparel and most other non­
durable goods were maintained. Department store
stocks at the end of April continued at the advanced
level reached at the end of March and were nearly
one-third above the corresponding period in 1950.
Commodity Prices— Prices of 28 basic commodi­
ties have declined further since the end of April
and on May 25 were 7 per cent below the February
peak but 38 per cent higher than a year ago. Reflect­
ing mainly declines in basic materials, the general
level of wholesale commodity prices has decreased
slightly since the end of April. Prices of finished
goods have generally changed little.
Consumer prices in mid-April were maintained
at the March level. Prices of foods declined slightly
but apparel, housefurnishings, and rents increased
somewhat further.
Bank Credit and the Money Supply— Bank loans
to business in leading cities showed little change
from mid-April to the third week of May, although
there is usually a decline at this season. Credit
extended for defense purposes continued to be sub­
stantial. Wholesalers and retailers also borrowed
substantial amounts, while commodity dealers made
large repayments on loans.
Deposits and currency held by businesses and
individuals increased substantially in April, reflect­
ing largely a shift of funds to private accounts
as Treasury balances were reduced following the
heavy inflow of tax receipts in March. At selected
banks in leading cities outside New York the rate
of use of demand deposits rose somewhat further.
Member bank reserve balances declined between
Page 87

early April and mid-May, reflecting gold and cur­
rency outflows, cash redemption of part of Federal
Reserve holdings of the weekly maturing Treasury
bills, and increases in Treasury deposits at the
Reserve Banks.
Security Markets— Common stock prices reached

Page 88




a new postwar high early in May but subsequently
declined to the lowest level since mid-January.
While yields on Treasury securities increased some­
what in the first three weeks of May, there was
little net change in yields on high-grade corporate
bonds.