Full text of Review (Federal Reserve Bank of St. Louis) : March 1, 1946

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Monthly Review
R E S E R V E

B A N K

MARCH 1, 1946

Survey of Current Conditions
The major economic problem facing the country
today is to obtain a steadily expanding volume
of production. Several steps which should
promote this end have been taken recently. The
long-awaited Government program for wide wageprice adjustments was announced in mid-February.
This was followed by settlement of the steel strike
which had threatened to halt production in many
important durable goods industries. An ambitious
program looking toward elimination of some of the
bottlenecks which are retarding vitally-needed
housing construction was presented. It is hoped
that these and other measures will lead to labormanagement cooperation and result in speedy maxi­
mum utilization of the nation’s vast production
facilities. If this is achieved and the flow of goods
to ultimate consumers expands rapidly, general
inflationary pressures should be eased.
EM PLOYM ENT

District employment in January continued to
increase but not as rapidly as in the nation as a
whole. National nonagricultural employment in
January was slightly higher than just prior to V-J
Day, while district nonagricultural employment was
still somewhat below the pre-peace level. In the
five major district cities, combined total employ­
ment in January was one per cent above December,
but five per cent below last August. The number of
workers currently employed in the district is some
145,000 less than is expected under full peacetime
employment, but about 155,000 more than in 1940.
The impact of returning servicemen upon the
labor market is beginning to be felt in greater de­




gree, with unemployment increasing appreciably in
January despite the rise in employment. While a
majority of veterans have now entered the civilian
labor market, a substantial number, perhaps as
many as 2 million, remain outside it. Their en­
trance, which will probably occur in the near future
(lag between discharge and job-seeking apparently
averages about two or three months), is not likely
to be offset completely by rising employment so
that unemployment is expected to increase further.
Current unemployment, however, is far below the
amount predicted last summer.
In this district the U. S. Employment Service
rates Evansville and Little Rock as having more
than 10 per cent of their labor forces unemployed,
and St. Louis, Memphis and Louisville as having
from 6 to 10 per cent unemployed. The district
labor markets, however, still have certain tight as­
pects principally because of difficulty in matching
workers and jobs. Consequently, scheduled work­
weeks remain considerably above the anticipated
postwar 40 hours. In St. Louis the work-week is
running 43 to 44 hours as compared with the war­
time level of 46 hours. The quit rate continues
high with workers still leaving their jobs about
as freely as in 1943 and 1944 when the average quit
rate was 5 per cent. In 1939, when jobs were scarce,
it was only 1 per cent.
IN D U S T R Y

After receding sharply from V-J Day levels, in­
dustrial production in this district moved up slight­
ly in November and then declined appreciably
(C o n t in u e d on P a g e 7 )

The Leather and Leather Products Industry
One of the most important of district manufactur­
ing pursuits is the production of leather and leather
products. Under normal conditions this industry
employs about one-tenth of all district manufactur­
ing workers and produces about one-twelfth of the
district's total value of manufactured goods. The
district industry is concentrated in an area, roughly
circular, radiating out some 125 miles from its cen­
ter at St. Louis. This region is the third most im­
portant shoe producing area in the United States,
being surpassed only by Massachusetts and New
York. Some 12.5 per cent of the nation's leather
workers are employed in the St. Louis region and
about one-sixth of all shoes produced in the United
States are made here. The area also ranks high in
production of other leather items, mainly luggage,
belting and small leather wares.
The only major industrial area in the district
with a heavy concentration of leather workers is
the St. Louis area where about 40 per cent of the
district’s total are employed. The four other major
district cities (Louisville, Memphis, Little Rock
and Evansville) all together had only 600 leather
workers in 1939 and have not many more today.
Virtually all district leather workers not in the
St. Louis area work in small cities and towns in
outstate Missouri and Illinois. Cape Girardeau,
Franklin, St. Charles and Saline counties in Mis­
souri and Clinton and Randolph counties in Illinois
are the more important outstate areas of leather
products manufacture.
E C O N O M IC C H A R A C T E R IS T IC S

The leather and leather products industry, as de­
fined by the Census, includes ten separate manu­
facturing pursuits. These a re: leather tanning,
currying and finishing; industrial leather belting
and packing; boot and shoe cut stock and findings;
footwear (except rubber) ; leather gloves and mit­
tens ; trunks and luggage; women's handbags and
purses; small leather goods; saddlery, harness and
whips, and miscellaneous items. By far the most
important of these activities are the two concerned
with shoe manufacture. Together they account
for about two-thirds of the production of the en­
tire leather and leather products industry. In 1939,
the last year for which Census data are available,
1.600 of the industry's 3,500 establishments were
shoe or shoe findings (soles, heels, laces, etc.) fac­
tories. Of the industry's 360,000 workers, almost
Page 2




260.000 were employed in these two lines. They
produced $865 million in goods, adding a manufac­
turing value of $385 million to raw materials cost­
ing $480 million. Comparable totals for the entire
industry were $1,390 million in value of production
and $585 million value added.
In the Eighth Federal Reserve District the im­
portance of shoe manufacture in the leather indus­
try is even more marked. There were, in 1939,
some 180 leather-working establishments in this
district, about 115 of these being shoe factories.
More than four-fifths of all leather workers in the
district produced shoes or shoe findings and an al­
most identical proportion of manufactured product
and value added was in these categories. About
39.000 of the district’s 46,000 leather workers were
in shoe or shoe findings plants.
Growth Pattern— The leather and leather pro­
ducts industry has been characterized by a gradual
growth trend interrupted at times by sharp upward
swings, mostly during war periods. For example,
value of output increased 2.4 times from 1899 to
1939 in contrast to a gain of 5.2 times for all manu­
facturing activity. In both world wars value of
output rose abruptly, more than doubling between
1914 and 1919 and, while detailed data are not
available, probably gaining as much between 1940
and 1945. Much of the wartime gains reflect price
advances, but also indicate substantially better than
average increases in physical production.
Comparison of district and national growth
trends from the turn of the century shows the dis­
trict curve rising more strongly than that for the
country as a whole, mainly because the district in­
dustry in 1899 was in its infancy. Over the past
two decades district trend, however, has been
slightly lower than national. In 1924, about 18.5
per cent of the nation's leather shoes were produced
in this district; in 1945 the percentage was 17.6.
In this district shoe plants tend to concentrate
on expensive and high quality shoes with the
result that on a pair basis shoe production here is
characterized by a somewhat different cycle than
national output. In the twenty-one years for which
accurate district shoe production figures are avail­
able, the district share of national output has varied
from a high of 21.3 per cent to a low of 15.3 per cent.
The highs were reached in the late 1920's, the lows
in the middle 1930’s. During the war years the
district's production has grown faster than that

for the nation as a whole, but the ratio of district
output to national output has not yet regained the
level reached in the late 1920's.
Decentralization Movement— Leather workers
were included among the first European settlers
on this continent. Before the American colonies
were two decades old, some tanneries were estab­
lished along the Atlantic coast to provide leather for
boots, saddles, belts and other necessary items.
When the industrial revolution introduced factory
procedures and machinery to the leather products
industry, the United States was in its infancy and
the industry naturally centered in the east, mostly
in Massachusetts and New York. Gradually it
moved south and west, and today important seg­
ments are located in the Carolinas, Ohio, Wisconsin,
Illinois, Missouri and California. The movement
is still continuing with factories spreading into the
old mid-south and new southwest.
The shoe industry began to migrate westward in
the last quarter of the Nineteenth Century. In the
St. Louis area, shoe manufacturing had its start in
the 1870,s. Prior to that time St. Louis shoe whole­
salers and jobbers had distributed products manu­
factured in New England. As their volume ex­
panded, they found it progressively more difficult to
secure sufficient merchandise to supply their dealers,
and in addition became dissatisfied with the lack of
uniform quality in the eastern-made shoes. Conse­
quently several St. Louisans invaded the manu­
facturing field.
These same factors resulted in a general midwestern manufacturing movement. The midwestern shoe producers found that they had at hand
an abundant supply of labor, part of it already
skilled. The large-scale migration from Europe just
before the Civil W ar and the natural westward
movement of the American people had brought
many skilled artisans to the midwest. The region
was also much closer to basic raw materials supply
(hides), but this advantage was mitigated some­
what by the fact that tanneries were difficult to
establish and the existing ones were concentrated
along the Atlantic coast line. Some tanneries, how­
ever, were established in this area.
A factor of primary importance in the trend to­
ward decentralization of the shoe industry was the
development of a system whereby shoe machinery
was leased to manufacturers on a royalty basis.
This procedure became the prevailing method of
procuring equipment after the United Shoe Ma­
chinery Corporation was formed in 1899. By using
leased machinery it became possible to establish
a shoe factory with a relatively small amount of




capital, which made it easier for the midwesterners
to invade the field.
Continuation of this policy of leasing machinery,
plus the fact that great strides were made in tech­
nically improving mechanical equipment, brought
about increasing mechanization and subdivision of
work in the shoe industry. At the present time,
200 separate operations (170 of them by machine)
are employed to produce a shoe. Most operations
are light and can be learned quickly. This makes
it easy to train workers and permits large use of
female labor. Some operations, however, notably
cutting, still require a high degree of skill.
As skills were diluted, the industry found it more
advantageous to locate wherever labor supply,
transportation facilities and raw materials could
be obtained under favorable terms. The net result
of this decentralization movement to date has been
the rise of the midwestern regions as important
centers of shoe production. For example, Missouri
increased its share of national shoe output from 7
per cent to 12 per cent between 1904 and 1939,
while Massachusetts declined in relative importance
from 44 per cent of nationwide production in 1904
to 19 per cent in 1939.
As noted, the tanning industry has not moved
westward in the same degree as has shoe manu­
facturing. This situation is the result of several
INDUSTRY PATTERN
LEATHER AND LEATHER PRODUCTS
US. And 6th District Total*-1939

SOURCE CENSUS Of

Page 3

factors, most important of which are: the rela­
tively large capital requirements for a tannery, the
necessity for an abundant supply of water, and
the fact that many types of hides and skins as well
as tanning materials are imported. The last two
factors have continued to make the Atlantic coast
region economically desirable for tannery location.
The first made it financially difficult to establish a
tannery in a new location. Some of the big midwestern concerns found it less expensive to pur­
chase existing tanneries than to build new ones and
now own East coast tanneries.
Supply and Demand Factors— Manufacture of
leather goods is largely a semi-durable consumer
goods industry. On the supply side it is influenced
strongly by the volume of animal slaughter, since
some by-products of this activity provide most of
the basic raw materials for the leather products in­
dustry. Domestic leather supplies normally are
supplemented by various types of imported hides.
To some extent, particularly in the field of luggage
and belting, but to a growing extent in shoes also,
development of synthetic raw materials is lessening
the industry’s dependence on animal hides.
Hide prices, and thus leather prices, tend to fluc­
tuate rather widely, being influenced by cattle popu­
lation, import volume, demand for leather products,
and competition resulting from excess tanning
capacity. Consequently, inventory policy in leather
product manufacture as well as in the tanning in­
dustry is of major importance. As noted earlier,
some manufacturers of leather products have en­
tered the tanning business and produce much of
their own leather requirements. This enables them
to minimize risks inherent in rapidly fluctuating
raw materials prices. Even these integrated manu­
facturers, however, usually depend upon open mar­
ket purchases for some supplies, a policy which also
enables them to take advantage of any sudden
price changes.
The trend toward vertical integration has led a
number of shoe companies to acquire textile fac­
tories so as to supply their own requirements for
linings and other fabric parts. Some shoe compa­
nies (and other leather products manufacturers)
have also organized their own retail outlets for di­
rect sales of their products or a portion of them to
consumers. In general, Eighth District shoe pro­
ducers have not followed this practice, preferring
to sell to retailers rather than to ultimate consum­
ers. In many cases, however, retailers feature ex­
clusive lines and manufacturers provide advertising
and promotional services. This situation tends to
lead to a large degree of retailer control by the
Page 4




manufacturers. Some large retailers, particularly
nationally-operating chains, have shoes made to
individual specifications carrying the retailer's
trade mark. Generally, wholesalers do not play a
major role in shoe distribution as the bulk of out­
put moves directly from manufacturer to retailer.
As noted, the leased machinery system in shoe
manufacture reduces the amount of initial capital
required to enter the field. This might be expected
to attract new enterprises in periods of expanding
consumer purchasing power. Actually, new compe­
tition is not great since it is extremely difficult to
break into the established retail distributor set-up.
Hence, the major companies enjoy a rather firmly
entrenched position. In the Eighth District the
two leading manufacturers account for about 75
per cent of total district output of shoes. Where
competition does exist, it usually is confined to
a certain product in a given price range and does
not extend over the whole field.
Leather products, particularly shoe, manufacture,
is traditionally highly seasonal. The war tended
to reduce seasonal swings in output because demand
outran supply, and plans have been cast which
look toward further smoothing of the production
curve. Ordinarily in shoe production there are
two peaks, winter or early spring and early fall.
Generally, manufacturers’ sales for the spring sea­
son begin about mid-October with deliveries be­
ginning at the turn of the year. Peak manufactur­
ing months are January, February and March. Fall
and winter sales begin about mid-April with retail
deliveries beginning about mid-August. Manufac­
turing activity thus is also heavy in July, August
and September. In the district the seasonal pro­
duction peaks tend to come somewhat later than
those for the nation.
Demand for leather products tends to be rela­
tively more stable than that for producers’ goods
or even more durable consumer goods. At the
same time, demand does fluctuate, varying with in­
come level. In 1930, for example, per capita shoe
consumption was 2.45 pairs. In 1942, it was 3.50
pairs, an all time peak. Consumption in the last
three years might have exceeded this peak had it
not been limited by rationing. There is an even
more pronounced variation in dollar value of shoes
purchased than in number of pairs consumed.
Generally, cheaper shoes sell in much greater vol­
ume in depression years than in prosperous times.
Since shoe quality for the most part is hidden in
construction, it is relatively easy to shift demand
from more expensive to less expensive shoes when
consumer purchasing power declines. It is less

easy to shift demand back to higher quality mer­
chandise when income rises, but generally adver­
tising and natural consumer upgrading of purchases
aid this end.

RATIO OF SHOE PRODUCTION. EIGHTH DISTRICT
TO UNITED STATES, 1924-1946

The industry has attempted to increase demand
for shoes largely through increasing styles in wom­
en's shoes and by promoting different styles for
different occasions. Emphasis is placed on a com­
plete shoe wardrobe and style changes are stressed.
The program has been fairly successful, with the ex­
ception of the war years, when shoes were rationed.
Women's shoes constituted 32 per cent of total
shoe output in 1925 and 39 per cent in 1939.
WAR RECORD
It has been said that leather ranks seventh in
importance among war materials. During the war
years output of leather products expanded consider­
ably. Total shoe production in the United States
in 1940 was about 400 million pairs. In 1941, it
climbed to 493 million pairs. In the succeeding
years, 1942 to 1944, output was below the 1941
level but was substantially above that of any year
prior to 1941. Average production in these years
was 42 per cent higher than in the 1930-34 period
and 17 per cent over the 1935-39 average. Pre­
liminary figures for 1945 indicate that production in
that year ran above 1941, reaching perhaps 500
million pairs, an all-time record.
District shoe output in the 1940,s rose relatively
more than that for the nation as a whole. In 1940,
total shoe production in the Eighth District was
65 million pairs. In 1941, it exceeded 85 million
pairs and in the following three years, while below
1941, was off relatively less from that peak than
national output. As compared with 1935-39 aver­
age output, that of 1942-44 was up 30 per cent.
District production in 1945 was about equal to
that of 1944, slightly more than 84 million pairs.
Even though shoe production was considerably
expanded during the war period, it was not suf­
ficient to satisfy demand which rose sharply along
with growing consumer purchasing power. In ad­
dition, military demand for shoes cut into civillian
supplies appreciably as the war years advanced. In
1941, the first year in which Government orders
accounted for a sizable amount of total production,
volume earmarked for the Government totaled about
15 million pairs. In 1944, Government takings
reached a peak of some 47 million pairs. Conse­
quently, it was necessary to impose shoe ration­
ing (first wartime regulation at the retail level)
early in February, 1943. Initially, rationing plans
called for the purchase of no more than three pairs




1924

1929

1934

1939

1944

of shoes per year by each consumer. As supplies
declined, this allotment had to be reduced. By mid1945 rationing plans had lowered civilian per capita
purchase of ration-type shoes to an annual rate of
1.5 pairs. In order to partly alleviate unfilled de­
mand, various non-ration types of shoes, particu­
larly women’s shoes, were developed in the war
years. These were made mainly of fabric uppers
and employed non-leather soles. In 1944, output
of this type shoe amounted to about 147 million
pairs and in 1945 to about 176 million pairs.
The shoe industry, in fact all leather products
industries, was handicapped during the war period
by curtailment of supplies of raw materials and by
difficulties in securing labor. Since a substantial
amount of the leather used is imported, the strain
on shipping at the height of the German submarine
campaign resulted in sharply reduced imports,
which proved a fairly effective limiting factor on
shoe and other leather goods production. The un­
balance of supply and demand led to a series of war­
time regulations for the industry. Among the more
important of these were regulation of imports of
hides and leather (M-63), set-aside orders for first
quality sole leather (M-80), a monthly allocation
plan of tanning quotas which gave Government
orders preference with respect to leather supplies
(M-194), and an order restricting the number and
simplifying the permitted styles during the war
period (M-217).
T o meet in some degree the problems of reduced
supplies of materials and labor, the industry, as
Page 5

noted, utilized a substantial volume of substitute
materials, developing some quite usable synthe­
tics. Labor shortages were offset to some extent
by increasing the number of women employed and
by speedup training programs for unskilled work­
ers. The Eighth District leather industry has
customarily employed relatively more women than
the nationwide industry; in 1940 some 45 per cent
of district leather workers were women as com­
pared with 38 per cent for the United States. Dur­
ing the war years the number of female employees
rose to more than half of the district’s leather in­
dustry labor force.
In general, profits in the leather industry run
somewhat lower than the average for all manu­
facturing. During the war years, however, profits
were fairly good despite price ceilings, rising cost.s,
and sharply higher taxes. From a net after taxes
standpoint (or return on net worth) 1941 and 1942
were the best years of the war period. In those
years profits ran about one-fourth more than in
1939. In 1944 and 1945, however, profits after
taxes averaged about the same as in 1939 even
though sales were much larger.
OUTLOOK

With the conclusion of W orld W ar II, the shoe
and other leather products industries were con­
fronted by comparatively simple reconversion prob­
lems. W ar production for the most part had con­
sisted of producing the same items as were made
during peacetime, the major difference being that
the military became a much more important cus­
tomer. Some few factories took on manufacture of
canvas items when leather supplies were not ade­
quate for capacity output, but by and large pro­
duction processes were not changed essentially even
in these cases.
The obstacles to production which confronted
the industry in wartime are gradually disappear­
ing and it is now easier to obtain labor, raw ma­
terials, and machinery than it was in the war years.
At the same time the leather goods producers could
use currently more labor, materials and equipment
than they have. In other words, despite easing of
the situation, relative shortages still exist.
The materials supply position has improved
with the release from service requirements of sub­
stantial amounts of sole and upper leather and the
increase in domestic hide supply. Still imports,
both hides and tanning materials, are at a low level,
and according to trade sources, will continue rela­
tively small because of shortages at the source and
because of domestic price ceilings.
Page 6




Labor is easier to procure since munitions out­
put has ceased and war veterans are returning.
During the war years, leather goods producers
found it difficult to get workers because there was
a substantial differential between the industry’s
wage rates and those for war plants. Some wage
increases have been granted and there is now ap­
parently no serious rate differential between most
leather-working and other industry. The tanning
industry, however, has had difficulty in securing
sufficient labor despite relatively high wage rates.
The industry expects to expand considerably as
factors presently limiting output become pro­
gressively less stringent. A survey of St. Louis man­
ufacturers’ expectations indicated that the leather
goods industry looked for a sharp rise in dollar
sales after reconversion of the economy. Postwar
sales of the surveyed concerns were expected to be
about 20 per cent over the wartime level and some
80 per cent higher than in 1940. If national income
remains high, consumer demand for leather products
should increase sharply from the wartime level
when goods either were unobtainable or rationed.
Return of men from military service will, at least
temporarily, raise demand for shoes above normal
levels. There is also some deferred demand by
civilians for replenishment of their war-depleted
shoe wardrobes. Finally, there will be intensive
industry promotion campaigns to increase leather
goods use and hence sales. This level of demand
should keep the industry operating at close to
capacity for at least the immediate future.
W ith a reduction in overtime work, employment
is expected to rise appreciably from the wartime low
and run ahead of the prewar level. Productivity
is expected to increase, although the return of num­
erous styles may lead to some temporary decline
in labor efficiency.
The shoe industry has worked out a new postwar
marketing system, the “ Balanced Program for
Shoes.” Main function of the new plan is to reduce
seasonal fluctuations to a minimum through yearround production and delivery schedules instead of
continuing to gear shoe output and styles to two
peak seasons. Under the new plan there would be at
least four or five overlapping merchandising periods
annually. Shoe men are confident that all groups
connected with the industry would benefit: manu­
facturers by the elimination of peak and valley
periods of production; labor by more steady em­
ployment; and retailers by receiving stock replace­
ments monthly in materials and styles currently in
demand, which would tend to minimize markdowns.
This plan calls for close cooperation between manu­

facturers and retailers and will require intensified
sales promotion activities. When manufacturers’
inventories become sufficient to permit discon­
tinuance of the present emergency program of
allocating quotas to retailers, the Balanced Program
will be put into effect.
The industry intends to do some new building
and to purchase some new equipment, although
outlays will not be large in comparison with those
of many other manufacturing lines. St. Louis area
leather goods producers expect to spend in the next
two years about $750,000 for new construction and
equipment for their St. Louis plants. The con­
struction program outside St. Louis is of more
significance for it will entail much larger increases
in manufacturing capacity and marks an accent­
uated trend toward decentralization. Some half
dozen new shoe factories, for example, are ear­

marked for various Arkansas towns. These will
employ some 2,000 workers. In 1940, total leather
worker employment in Arkansas accounted for
only 53 persons.
Substantial funds are held in very liquid form,
deposits or short-term Government securities, by
the leather goods industries. These can be used
for plant expansion, inventory build-up, and re­
establishment of marketing connections. Very little
borrowing, either from banks or from other sources,
is anticipated for any purpose. For example, of the
expenditures for new building and equipment in the
St. Louis area, only 6 per cent is to be borrowed
and only half of this from banks. Most of the
expansion program in other localities is being fi­
nanced by the towns obtaining the new factories so
that the producers’ own investment in the new
facilities will be relatively small.

CU RRE N T CON DITIO N S

cember because of the steel strike which began on
January 21. Not all steel plants in this area were
struck, however, so that some steel production took
place throughout the strike period. Activity in the
closed plants had not been resumed by the end of
the third week in February, and there was little
prospect of any production from these plants in
February. Even after the local labor disputes are
settled, it will take some time to restore operations.

(Continued from Page 1)

again in December with the decrease largely ac­
counted for by the shorter work-month. In Janu­
ary, despite the serious strike situation, the level of
industrial activity in this district apparently was
slightly higher than in December, although it did
not reach the November level and was far below
that of a year earlier. The January upturn is ex­
plained partly by the fact that the steel strike,
which while it was on adversely affected manu­
facturing activity, did not begin until fairly late
in the month and partly by the fact that the over­
all strike situation in the district was relatively less
serious than in the nation as a whole. By and
large, the St. Louis area was the only major in­
dustrial section in the district where strikes severely
affected output. Probably activity levels in Feb­
ruary and the immediate subsequent months will
exhibit more slowly-rising trends than formerly an­
ticipated as the full effects of the over-all strike
situation are diffused through the economy.
Manufacturing— In January, the consumption of
industrial electric power in the major cities of the
district was 3 per cent more than in December, but
8 per cent less than in November and 34 per cent
less than in January, 1945. Four of the six cities
for which industrial power consumption data are
available registered increases in January relative
to December, with only Louisville and Memphis
showing a decline. January power consumption in
Little Rock was higher than a year earlier.
Steel mill operations in the St. Louis district in
January averaged considerably lower than in De­




Steel products manufacturers and nonferrous
metal workers increased output in January in this
district, apparently drawing heavily upon inven­
tories to do so. There is some prospect that antici­
pated future gains in these lines will be curtailed
because of strike-caused interruptions in the flow of
raw materials.
Of the 60 whiskey distilleries in Kentucky, 49
were in operation at the end of January as com­
pared with 48 at the end of December and 53 at
the close of January, 1945. Relative to a year
earlier, current output is much more depressed than
number of plants in operation would indicate, be­
cause most distilleries are now working at far less
than capacity. Apparently there is little likelihood
of any appreciable increase from present low pro­
duction levels because of the grain situation. The
Department of Agriculture has allotted sufficient
grain to permit distilleries to operate 7% days at
peak capacity (24 hour production) or about 21
days at current operating levels during February.
The March allotment was reduced, however, and
in view of the recently-announced program to con­
serve wheat, material shortages have become very
critical in the whiskey industry. Trade sources in­
Page 7

dicate that some distilleries will cease operating en­
tirely if the supply situation does not ease. An­
other heavy consumer of grains is the important
district brewing industry. Output in this field in
January was up somewhat from December but is
expected to be curtailed sharply in future months
because of material shortages.
Production of lumber in the district in January
showed a further seasonal decline from previous
months. Hardwood producers operated at about
46 per cent of capacity as compared with 55 per cent
in December and 78 per cent in November. South­
ern pine production was less than at any month
since mid-1945. Mill inventories of southern pine
are approximately 43 per cent below last year.
Mining and Oil— During January, coal produc­
tion in the Eighth District was larger than in De­
cember but was less than in January, 1945. Output
in January amounted to 16.6 million tons as com­
pared with 15.5 million in December and 17.9 million
in January, 1945. Crude oil production in January
showed an increase in output for the third consec­
utive month and was only slightly below that of
January, 1945. The current daily rate of opera­
tions is approximately at the same level as in the
middle of 1945.
Construction— Building activity in this district
dropped seasonally in January; the cold weather
retarded construction despite exceptionally high de­
mand. At the same time, January construction
was much higher than a year earlier. In terms of
dollar value of building permits granted in the major
district cities, building in January was off 10

per cent from December but was eight times as
large as in January, 1945.
As noted previously in this Review, demand for
housing in this district, particularly in the larger
cities, is extensive and with more and more veterans
returning from service the situation is rapidly
worsening. Vacancy rates are currently so low as
to be almost meaningless, thousands of families are
living doubled up, and other thousands are merely
existing in substandard dwelling units.
TRADE

The usual decline from high holiday levels was
registered in district trade in January, but the
month’s sales held well above those of a year earlier.
Preliminary reports for the first part of February
indicate a continuation of heavy buying. These
gains have occurred in the face of shortages in
certain lines even more severe than those experi­
enced during the war period, and point to the prob­
ability of a new all-time sales record when goods
reappear in more adequate volume.
The dollar sales level at district department
stores in January was off 47 per cent from the
record breaking level of December, 1945, but was
11 per cent higher than in January of that year.
In the first two weeks of February sales ran 21 per
cent and 27 per cent, respectively, over the com­
parable weeks of 1945. Among district cities the
seasonal drop in January sales was most pronounced
in the smaller urban centers where declines in war
activity brought relatively greater losses in income

AGRICULTURE

PRICES
CO ST O F L IV IN G

C A S H F A R M IN C O M E
(I n thousands
of dollars)

Decem ber
Cumulative for 12 months
-------------------------------- ---------------------------------------------------1945
1944
1945
1944
1943

Arkansas .............. $27,191 $ 34,201 $ 314,978 $ 339,562
Illinois ...................
94,936
99,990
1,166,459
1,178,325
Indiana .................
54,702
51,543
678,335
675,542
Kentucky ............
88,225
67,369
429,012
364,244
Mississippi ..........
34,457
26,680 336,596
345,159
54,366
58,037
688,445
714,696
M issouri ..............
Tennessee ............
45,920
44,369 326,589
329,165
Totals

............... 399,797

R E C E IP T S A N D

382,189

3,940,414

S H IP M E N T S A T

3,946,693

N A T IO N A L

Receipts
Jan.,
1946
Cattle and Calves..l01,353
H o g s .......................219,392
H orses and Mules.. 4,626
Sheep
..................... 48,502
Totals

.................373,873

Page 8




STOCK

$ 292,348
1,152,449
657,387
330,294
319,652
657,534
298,248
3,707,912

YARDS

Shipments

D ec.,
1945

Jan.,
1945

Jan.,
1946

D ec.,
1945

Jan.,
1945

111,116
228,553
3,123
67,645

135,500
279,771
2,294
44,228

63,617
89,292
4,626
10,898

57,577
80,199
3,363
15,206

56,240
98,064
2,282
5,843

410,437

461,793

168,433

156,345

162,429

Bureau o f L abor
Statistics
(1935-39 = 100)

Jan. 15, D e c. 15,
1946
1945

U nited States.... 129.9
St. L o u is........ 128 6
M emphis ........
*
*— N ot available.

129.9
128.4
133.3

Sept. 15,
1942

Jan. 15, 46 Compared with
D ec. 15, ’ 45
Sept. 1 5 ,’ 42
117.8
116.6

119.3

+
*

-0 -%
0.2

4 -1 0 .3 %
+ 1 0 .3
*

COST OF FOO D
Bureau of L abor
Statistics
Jan. 15,D ec. 15, Sept. 15,
Jan. 15, 46 Compared with
(1935-39 = 100)
1946
1945
1942
D ec. 15, ’ 45
Sept. 1 5 ,’ 42
U . S. (51 cities) 141.0
St. L ouis ..........144.3
Little R o ck ..... ..140.8
Louisville .........151.2
Memphis ..........151.2

141.4
144.1
139.8
151.8
151.8

126.6
126.7
129.2
129.7
129.7

— 0.3 %
4-0.1
+ 0 .7
— 0.7
— 0.4

4-11 -4 %
+ 1 3 .9
+ 9.0
+ 8.1
+ 1 6 .6

W H O L E S A L E P R IC E S IN T H E U N IT E D S T A T E S
Bureau of L abor
Statistics
Jan., ’ 46 com p, with
(1 9 2 6 = 1 0 0 )
J a n .,’46 D e c . , ’45 Jan., *45
D e c . , ’ 45 J a n .,’ 45
A ll C om m odities..........
107.1
Farm P rod u cts............ 129.9
Foods .......................... 107.3
Other .................. ....... 100.8

107.1104.9
-0 -%
131.5
126.2
—
10&.6104.7
— 1
100.599.1
-0-

1

+ 2%
+ 3
+ 2
+ 2

than in the larger communities such as St. Louis,
Louisville and Memphis. As compared with a year
earlier, sales gains were particularly marked at the
middle-size district cities (Evansville, Springfield,
Quincy and Fort Smith) and the smaller towns (El
Dorado, Pine Bluff, Alton, Carbondale, Jackson, and
some others). Tw o of the larger cities, Louisville
and Memphis, ran ahead of the district average gain
over last year; St. Louis approximated the average,
while Little Rock fell far below it.
Sales volume increases over January, 1945 also
showed great variation among individual stores,
reflecting to some extent differences in the ability
of stores to obtain supplies of merchandise. In the
aggregate department store inventories, however,
were at a higher level at the close of January than
a year earlier, although the heavy Christmas shop­
ping had reduced stocks to a point 26 per cent below
the pre-Christmas (November 30, 1945) level.
The most pronounced gains in sales of retail
lines reporting to this bank have been occurring in
men’s apparel shops and furniture stores. Higher
sales levels at men’s apparel stores reflect largely
demands by returning veterans for civilian cloth­
ing. Men’s stores are apparently experiencing con­
siderable difficulty in maintaining even supplies of
stocks, and some items are virtually unattainable.
At the close of January total stocks at men’s wear
stores in this district were off 5 per cent and
47 per cent, respectively, from the levels of a month
and a year earlier.
District furniture store sales declined seasonally

in January but were 38 per cent larger than in
January, 1945. The large volume of sales made by
these stores reflects re-establishment of family
units by returning servicemen and new marriages.
Furniture store stocks are apparently easier to ob­
tain at present. At the close of January inventor­
ies at these stores in the district were 2 per cent
higher than at the end of January, 1945. Stocks
are, however, still inadequate to meet current de­
mand even though the demand is limited to some
extent by housing shortages.
BANKING AND FINANCE
Thus far in 1946 banking developments have not
differed materially from the wartime pattern. De­
posit behavior, allowing for the influence of Janu­
ary 15 tax payments, has been similar to that of
other periods following major Treasury financings
in the past three years. Total loan volume remained
fairly stable, as did investment portfolios.
Perhaps the most significant monetary develop­
ment in early 1946 was the relatively heavy return
flow of money from circulation after the holiday
period. From January 2 to February 13 currency
in circulation in the United States declined by $524
million, while in the comparable period a year
earlier there was an increase of $207 million. A l­
though the reduction this year is still less than sea­
sonal, it is the first significant decline that has oc­
curred in money in circulation since January, 1941.
Only relatively small changes occurred in de­
posits of reporting member banks in this district
DEBITS TO DEPOSIT ACCOUNTS

INDUSTRY

C O N S U M P T IO N O F E L E C T R IC IT Y
N o. o f
Jan.,
D ec.,
Jan.,
Jan., 1946
(K .W .H .
Custom 1946
1945
1945
com pared with
in th o u s .)
ers*
K .W .H .
K .W .H . K .W .H . D e c .,’ 45
Jan., ’45
Evansville ........ 40
5,517
5,248
8,361
+ 5%
— 34%
Little R o c k ...... 34
3,479
3,383
3,166
4- 3
+10
L ouisville ........ 82
14,562
16,634
16,573
— 12
— 12
M emphis .......... 31
5,104
5,489
7,385
— 7
— 31
Pine B lu f f ........ 19
1,667
1,393
7,696
+20
— 78
St. L ou is.......... 96
45,196
41,273r
71,550r + 1 0
— 37
T otals .......... 302
75,525
73,420r 114,731r + 3
— 34
* Selected industrial customers,
r— Revised.
L O A D S I N T E R C H A N G E D F O R 25 R A I L R O A D S
A T ST. L O U IS
First nine days
Jan., ’ 46
D ec., *45 Jan., ’ 45
Feb., *46 Feb., *45 1 m o., *46 1 m o., ’45
121,952
109,245
155,942
36,381
45,828
121,952
155,942
S ou rce: Term inal Railroad A ssociation o f St. Louis.
C O A L P R O D U C T IO N
(I n thousands
of tons)
Jan., ’ 46
D ec., ’ 45 Jan., ’ 45
6,056 6,545
Illinois ..................... 6,442
Indiana ..................... 2,344
2,229 2,523
K entucky ................. 6,222
5,7116,270
Other D ist. States.. 1,555
1,509 2,568
T otals...................... 16,563




15,505

17,906

+
+
+
+

Jan., ’46 com p, with
D ec., ’45
Jan., ’45
6%
— 2%
5
— 7
9
— 1
3
— 39
+

7

(I n thousands
of dollars)

Jan.,
1946

D ec.,
1945

Jan.,
1945

12,674 $
13,168 $
11,099
El Dorado, A rk .......$
F ort Smith, A rk .....
30,233
41,806
26,269
Helena, A rk .............
6,625
7,265
5,503
Little R ock, A rk .....
86,196
93,194
85,901
Pine Bluff, A rk .......
19,257
24,126
19,331
Texarkana, A rk.-T ex.
9,438
9,662
12,110
Alton, 111....................
16,666
18,792
15,738
E .S t.L .-N a t.S .Y .,Ill.
73,350
74,604
8 6,739
Quincy, 111..................
19,551
20,515
16,327
Evansville, In d .........
77,394
78,122
101,013
Louisville, K y ..........
404,574
443,941
403,152
26,149
23,778
25,261
Owensboro, K y ........
Paducah, K y .............
10,880
10,860
8,783
Greenville, M iss.......
12,355
12,991
12,108
Cape Girardeau, M o.
7,824
7,004
7,836
Hannibal, M o ...........
5,587
5,859
5,521
Jefferson City, M o...
43,318
25,968
52,040
St. Louis, M o ........... 1,066,747 1,285,971
1,084,646
Sedalia, M o ................
7,696
7,573
6,154
41,093
36,765
32,913
Springfield, M o ........
Jackson, Tenn..........
12,490
13,993
9,762
Memphis, Tenn.......
359,418
376,699
291,132
Totals

................. . 2,349,515

2,632,656

2,319,338

Jan., ’ 46 com p, with
D ec., ’ 45 Jan., ’45
— 4%
— 28
— 9
— 8
— 20
— 2
— 11
— 2
— 5
— 1
— 9
+10
-0 — 5
+12
— 5
+67
— 17
+ 2
+12
— 11
— 5
— 11

+14%
+15
+20
-0 -0 — 22
+ 6
— 15
+20
— 23
-0 + 4
+24
+ 2
-0 + 1
— 17
— 2
+25
+25
+28
+23
+

1

— 8

Page 9

RETAIL TRADE
DEPARTM ENT

STORES

______ N et Sales
January, 1946
com pared with
D ec., *45
Jan., ’45

Stocks
on Hand
Jan. 31, 1946
com p, with
Jan. 31,1945

Stock
Turnover
Jan. 1, to
January 31,
1946
1945
.48
.37

— 11%
4-15%
Ft. Smith, A rk ........... — 54%
— 1
.45
.44
L ittle R ock, A rk ...... — 55
4- 2
.43
.37
4- 8
4-24
Q uincy, 111................... — 51
.29
.28
4-12
Evansville, In d ............ — 51
4-H
.52
.52
4-14
Louisville, K y .............. — 49
+ 11
.46
.45
St. Louis Area1.......... — 42
4- 9
4- 4
.47
.45
St. L ouis, M o ......... — 42
+ 9
4- 4
— 5
E. St. Louis, 111..... — 56
.47
.36
4-25
Springfield, M o ......... — 49
.52
.49
4-13
Memphis, T enn.......... — 49
4“ 1
.411
.37t
4-23t
4-111*
*A11 other cities..........
—451
.451
.47t
8th F. R . D istrict.......... . —47f
4 -H t
4- 4t
*E1 D orado, Fayetteville, Pine B luff, A r k .; A lton, Harrisburg, Jackson­
ville, M t. V ernon, 111.; N ew A lbany, Vincennes, I n d .; Danville, H o p ­
kinsville, M ayfield, Paducah, K y . ; Chillicothe, M o .; and Jackson, Tenn.
^Includes St. Louis, M o., E ast St. L ouis and Belleville, 111.
Trading d a ys: January, 1946— 2 6 ; Decem ber, 1945— 2 5; January,
1945— 26.
,
T
i n ._
Outstanding orders of reporting stores at the end of January, ly4o,
were 23 per cent greater than on the corresponding date a year ago.
Percentage of accounts and notes receivable outstanding January 1,
1946, collected during January, b y cities:
Instalm ent E xcl. Instal.
Instalment E xcl. Instal.
A ccoun ts A ccou n ts
A ccounts Accounts
61%
Q
uincy
..........
46%
72%
F ort Sm ith...............
63
St. Louis........ 38
72
Little R ock.... 27
62
O ther cities.... 25
62t
Louisville ...... 39
62
8th F .R . Dist. 37
671
M emphis ........ 42
IN D E X E S O F D E P A R T M E N T S T O R E SALE S A N D STOCKS
8th Federal Reserve District
Jan.,
1946
Sales (daily average) Unadjusted1.................. 192t
Sales (daily average), Seasonally adjustedx..234t
Stocks, U nadjusted2................................................138t
Stocks, Seasonally adjusted2............................160t
^ a i l y A verage 193 5 -3 9= 1 0 0.
2M onthly A verage 1935-39 = 100.
f Preliminary.

D ec.,
1945
365
227
130
155

N ov.,
1945
303
266
175
163

Jan.,
1945
173
211
128
149

during the last six weeks. Demand deposits of in­
dividuals, partnerships and corporations increased
nearly $45 million, about half of the increase com­
ing at reporting banks in St. Louis. Government
deposits in these banks decreased about $4 million.
Bankers’ balances dropped about $33 million from
year end to mid-February. Time deposits continued
their upward trend, increasing $7 million in the pe­
riod. This gain was less, both absolutely and rela­
tively, than that of the comparable period last year
and may be partly due to the greater use of sav­
ings by individuals to pay income taxes and by
workers involved in strikes for living expenses.
Total loans of the reporting member banks rose
but slightly over the past six weeks. The most
notable change in a particular loan category was
an increase of $1.6 million in “ other” loans, the
largest part of which was in loans to consumers.
This increase in consumer credit was offset in part
by decreases in commercial, industrial and agricul­
tural loans, and loans on United States Government
securities.
Total investments of the major city banks of
the district increased $15 million in the six weeks
following January 2. The increase was due prima­
rily to gains of about $22 million each in Treasury
certificate and bond holdings, which were offset in
part by a decline of about $21 million in Treasury
bill portfolios.

S P E C IA L T Y STO R ES
Stock
Stocks
Turnover
on Hand
N et Sales
January, 1946,
Jan. 31, 1946,
Jan. 1, to
compared with
com p, with
January 31,
D ec., 1945 Jan., 1945 Jan. 31, 1945 1946
1945
M en’s Furnishings.... — 56%
— 47%
.57%
.27%
Boots and Shoes........ — 33
4-17
— 26
1.00
.62
Percentage of accounts and notes receivable outstanding January 1,
1946, collected during January:
M en’s Furnishings ............... 6 2 %
B oots and Shoes..................... 67%
T rading d a y s: January, 1946— 2 6 ; December, 1945— 25 ; January,
1945— 26.
R E T A IL F U R N IT U R E STO RES
N et Sales
Inventories
January, 1946
January 31, 1946
Ratio of
com pared with
com pared with
Collections
D ec. *45 Jan. ’45 D ec. 31, ’ 45 Jan. 31, ’ 45 Jan. ’ 46 Jan. ’ 45
St. Louis A rea1 — 29%
+24%
— 11%
— 5%
51%
43%
St.
Louis..,...— 25
+ 24
— 11
— 5
53
46
Louisville
........ — 37
+ 58
+ 4
4- 4
34
28
Memphis .......... — 39
- f 47
*
*
29
27
4 - 47
— 6
4- 4
33
30
Little R o c k ......— 22
F ort Sm ith........— 7
4-127
*
*
*
*
8th D ist. T otal2— 29
4 - 38
— 3
4- 2
41
35
* N ot shown separately due to insufficient coverage, but included in
Eighth D istrict totals,
in c lu d e s St. Louis, M issouri ; E ast St. Louis and A lton, Illinois.
2In addition to above cities, includes stores in Blytheville, Pine B luff,
A rkansas; Evansville, In d ia n a ; Henderson, Hopkinsville, Owensboro,
K en tu ck y; Greenville, Greenwood, M ississippi; Cape Girardeau and
Springfield, M issouri.
PERCENTAGE

D IS T R IB U T IO N

OF

F U R N IT U R E

Jan., *46
Cash Sales ................................................. .' 28% "
Credit Sales ................................................ 72
T otal Sales .............................................. 100

Page 10




D ec., ’ 45
28%
72
100

SALES
Jan., ’ 45
23%
77
100

AGRICULTURE
At this time of year agricultural activity is at a
minimum, although plans are being laid for the
coming planting season. These plans call for 1946
crop production to be maintained at levels equal
to those of the war years. There will be some shifts
among crops, but it is hoped that aggregate out­
put will compare favorably with that of 1944 and
1945. Farmers will be aided in 1946 by an im­
proved labor supply, more farm machinery and fer­
tilizer, and generally adequate seed supply. Thus
the principal uncertain factor in the outlook is the
weather. While present weather conditions are
favorable, except in the Great Plains area, the
weather encountered during the planting, growing
and harvesting seasons will be vital in determining
the volume and quality of 1946 crop production.
An unfavorable crop season might produce seri­
ous situations in many areas. Present supplies of
grains and feed crops are fairly good, but disap­
pearance is at record rates. Large crops are, there­
fore, necessary to maintain relatively ample food

and feed supplies throughout 1946 and 1947. At
the beginning of this year stocks of most grains
on farms were but slightly below those of a year
earlier. In aggregate, feed stocks were but 6 per
cent below the January 1, 1943 peak. Stocks of
oats were at a record level and hay stocks were also
very high. By-product feed supplies, while fairly
high, were somewhat less than a year earlier.
The animal population is still exceptionally large
by prewar standards, although it has been reduced
from wartime peak levels. In addition to continued
high demand for grains and feed concentrates from
this source, domestic industrial demand and un­
usually high demand for exports has brought about
a sustained rapid rate of disappearance. By the
time 1946 crops reach harvest stage, supplies will
probably be below average. Present supplies must
be utilized carefully, therefore, to meet the needs
for high output of livestock and livestock products,
most domestic industrial demand, and to help feed
distressed foreign areas.
Generally, the district feed supply situation is
about as good as that for the nation as a whole,
but in several local areas feed shortages either
exist or are expected. The district, in contrast to
the nation, has not enjoyed nine good crop years.
Flood and drouth in this region proved limiting fac­
tors on production throughout many of the war
years.
Winter wheat condition varies rather widely with
actual deterioration resulting from dry weather and
lack of adequate snow coverage in the central- and
south-west. In other areas, including this district,
condition of the crop is good. On the basis of
present conditions, a national wheat crop exceeding
a billion bushels, but by a smaller margin than in
1944 and 1945, is in prospect.
The farm price outlook continues favorable. The
parity index reached a new 25-year high during
December, 1945 at 176 per cent of the 1910-14 aver­
age. The unusual demand for farm products in­
dicates that the over-all level of farm prices should
be maintained at or near present points throughout
most of 1946 and that income from farm marketings
in 1946 (assuming a good crop year) will remain
near the record levels of the past four years. There
is evidence, however, that prices paid by farmers
will tend to increase in relation to prices received,
which may result in slightly lower net incomes on
farms in 1946 than were enjoyed in 1945. Despite
this fact, however, a very favorable net income situ­
ation is in prospect for farmers this year.




WHOLESALING

Lines

of

Com m odities

N et Sales

Stocks

January, 1946
Data furnished b y Bureau o f Census , com pared with
D e c., *45 Jan., *45
U . S. D ept, o f C om m erce.*
Electrical

Supplies

..............................

Hardware ........... ....................................
Plum bing Supplies
............................
T ob a cco and its P rodu cts...................

—
8%
4 - 39
4- 20
— 15
—
3
— 8
— 17
— 10

Total all lines**.....................................
* Preliminary.
** Includes certain lines not listed above.

Jan. 31, 1946,
com pared with
Jan. 31, 1945

4 - 6%
4- 26

4-

4 - 15
4 - 17
4- 26
4- 33
— 6
4- 10

4- 22
4- 25
4 - 21

15
4- 1
4- 30

CONSTRUCTION
B U I L D I N G P E R M IT S
Repairs, etc.
N ew Construction
Num ber
Cost
Number
Cost
(C ost in
1945
1946
1946
1945 1946 1945
thousands)
1946 1945
34
79*
47 $
63' $
... 21
6 $ 121 $ 22
Evansville
23
102
66
438
20
149
147
Little Rock... ... 73
16
47
15
1,024
23
52
120
Louisville .... ... 86
134
Memphis .......
227
212 227
1,789
158
327
St. L ouis............. 184
70
2,926
209
123
883
149
80
Jan. T otals.... ... 786
399
341
6,298
569
696
567
1,258
Dec. Totals....,
360
7,681
476
382
703
336
1,171

BANKING
CH AN G ES IN P R IN C IP A L A SSET S A N D L IA B IL IT IE S
F E D E R A L R E S E R V E B A N K O P ST. L O U IS
Change from
Jan. 16,
Feb. 13,
Feb. 14,
1946
1945
(I n thousands of dollars)
1946
Industrial advances under Sec. 13b........ $ ..................
Other advances and rediscounts.................
4,530 4 - '4 0 7 — ’13,070
U . S. securities................................................ 1,066,980 — 15,837 -4-259,682
T otal earning assets................................... 1,071,510 — 15,430 -}-246,612
T otal reserves .......................................... .
640,534
T otal deposits ............................................ .
676,384
F . R . notes in circulation............................1,046,588

4- 15,898
4- 12,160
—
6,468

4 . 48,246
4 - 89,193
4-110,046

...........

-55

Industrial commitments under Sec. 13b .................

PRINCIPAL RESOURCE AND L IA B IL IT Y ITEMS
OP REPORTING MEMBER B A N K S
Change from
Feb. 13,
Jan. 16,
Feb. 14,
(I n thousands of dollars)
1946
1946
1945
21,758 -|-350,456
T otal loans and investments..................... .$2,216,994
$2,216,994 —
— 21,758
I
Commercial, industrial, and agriculturalL
344,020 —
344,020
117 4 . 83,304
loans* ................ - .......................................
9,671 —
Loans to brokers and dealers in securities
981 -j- 2,082
Other loans to purchase and carry
81,904
securities ............................................
834 4- 47,553
70,516 4 Real estate loans...................... ..........
823 4 - 5,703
L oans to banks.....................................
3,347 4,
870 4- 2,209
Other loans ..........................................
97,303 4 . 1,567 4- 15,835
606,761 4 - 1,328 4-156,686
Treasury bills ................................................
31,330
37,061 — 11,047
Certificates o f indebtedness..........................
309,810 4 - 16,591 4 - 18,816
Treasury notes ................................................
308,049
18,361 — 38,330
U . S. B onds...................................................
825,215 4 - 18,793 4-226,069
Obligations guaranteed b y U . S. G ovt.
362
1,490 — 18,454
135,467
1,558 4- 16,716
1,610,233
23,086 4-193,770
117,547
528
1,866 —
1,075,396
3,803 4- 33,825
T im e deposits ......................................
346,298 4 - 4,328 4 . 64,023
U . S. Government deposits.............
495,141 4 - 7,961 4-227,822
Interbank deposits .............................
666,040
38,034 4- 61,254
B orrow ings
..........................................
3,000 4 515 — 14,500
•Includes open market paper.
**O ther than interbank and G overnm ent deposits, less cash item s on
hand o r in process o f collection.
A b o v e figures are for selected member banks in St. L ouis, Louisville,
Memphis, L ittle R ock and Evansville.

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Page 11

Revised Indexes of Department Store Sales and Stocks
With this issue the Federal Reserve Bank of St.
Louis begins publication of revised index series of
department store sales and stocks. Revision of the
sales index involved only changes in seasonal ad­
justment factors for a few recent years. The unad­
justed index numbers were not changed from those
carried in past Reviews. The stocks index, how­
ever, was completely revised and was put on a
1935-39 base, comparable with the sales index.
In the light of 1944 and 1945 experience, it was
determined that certain fluctuations, regarded at
the time of the original revision of the sales index
as irregular, were really seasonal in character—at
least for the war period. Consequently, it was de­
cided to recalculate seasonal adjustment factors and
recompute the seasonally adjusted indexes from
1939 through 1945. The new adjusted series is not
greatly different from the old for the years 1939
through 1942, but in 1943, 1944 and 1945 is much
smoother than before revision.
Revision of the stocks index involved complete
recalculation of indexes from 1922 to date and ad­
justment for seasonal variation by a statistical
method identical with that used for the sales index.
The sample was expanded to include figures of a
greater number of stores, and while data is not

for all currently reporting stores for t h e
entire period, smaller samples were built up to the
current sample level throughout by chaining in
overlapping years.
a v a ila b l e

In addition, since the group of stores reporting
stocks figures is somewhat less representative than
that reporting sales, an adjustment was made to
tie the stocks index directly to the sales index.
This refinement involved application of stock-sales
ratios, calculated from the sample of all stores re­
porting both stocks and sales, to the sales level
shown by the regular sales index which is adjusted
to Census levels. The adjustment was not large in
a n y year, wT
hich indicates that the stores reporting
both sales and stocks are almost as representative
of the district total as the larger sample which re­
ports only sales.
The stocks index, as noted, ns on a 1935-39 aver­
age base. The index is based on the sum of total
stocks of all reporting department stores in the
district. Stocks are measured by dollar retail value
at the close of each month, and consequently there
is no adjustment for number of trading days.
Copies of the revised sales index series and the
new stocks index series are available upon request
to the Research Department of this bank.

fNDEXES OF DEPARTMENT STORE S A L E S AND STOCKS
ADJUSTED
Percent

Page 12




Percent

FO R

M

S E A S O N A L V A R IA T IO N

THE EIGHTH DISTRICT