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

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Volume XXXIII

M ARCH, 1951

THE FEDERAL RESERVE BANK OF ST. LOUIS




IN THE

DEFENSE PROGRAM

by

Delos C. Johns,
President
Federal Reserve Bank
of St. Louis

Number 3

The national defense program is bringing sub­
stantial changes to the American economy. Those
changes are being reflected in the Eighth Federal
Reserve District and in the work of the Federal
Reserve Bank of St. Louis.
In this brief article, I wish to discuss three points:
The responsibility of the Federal Reserve System
and of the St. Louis Reserve Bank, as part of the
System, in furthering the defense effort; the task
facing the commercial bankers of the district in
providing for sound financing needs; and the need
for continued strengthening of the district’s econ­
omy for a probable long-term defense effort.
The major responsibility of the Federal Reserve
System in the period ahead is to formulate national
monetary policy that will contribute most effi­
ciently to the success of the national defense pro­
gram. This requires, on the one hand, that the
System make sufficient reserves available to the
commercial banks so that the essential credit needs
of the economy can be met. But it requires, on
the other hand, that the supply, cost and availabil­
ity of bank reserves be regulated to the end that the
volume of bank credit be held to the minimum con­
sistent with the essential needs of the economy.
The primary task facing the United States at
present is to attain the production goals necessary
to meet the requirements of a large scale military
defense program plus the essential requirements
of the civilian economy. T o reach that objective it
is vital to hold down inflationary pressures. Infla­
tion raises the cost of the military defense program.
It reduces the value of the dollar and makes Gov­
ernment financing more difficult. It creates great
distortions in the economy and impairs the efficient
functioning of the economic machine. It drives
people away from money and into goods, thereby
further intensifying inflationary pressures and cre­
ating greater economic distortions.
Appropriate monetary policy is essential to the
fight against inflation. It cannot do the job alone,
but it is an essential element in any anti-infla­
tionary program. As a curb on inflation, monetary
policy aims at restraining growth in bank credit
which will result in additions to the money supply.
It does this through making reserves less available
and more costly to the commercial banks. Unless
the commercial banks obtain additional reserves
they cannot extend additional credit.
It is most important to recognize that when the
Page 30




Federal Reserve System attempts to restrict the
supply and availability of bank reserves, such
action tends to be expressed in an increase in the
cost of money, a rise in interest rates. This increase
in money cost is just one result of making reserves
harder to obtain; it is not an end in itself but
merely one expression of a tighter money policy.
It is also important to recognize that Federal
Reserve action to restrict credit (through restrict­
ing supply and availability of reserves) cannot be
taken if the System is required to support a rigid
pattern of rates on Government securities. When
the System buys Government securities it adds to
bank reserves. The very act of preserving com­
plete stability in Government security rates means
that the System has to buy securities at predeter­
mined prices when offered by banks and other
holders, thereby forfeiting its ability to use open
market operations as a means of making reserves
less available. Under conditions now prevailing,
flexibility in Government security prices and
yields is a necessity if the Federal Reserve is to
curb bank credit expansion.
As noted earlier, a restrictive monetary policy
does not mean that no credit should be used. The
economy cannot function without adequate credit.
The crux of the financing problem in a time of infla­
tion is to see that there is adequate credit for
essential needs, but that the total supply of credit
is held within reasonable bounds. The Federal
Reserve System is attempting, in effect, to put an
over-all ceiling on bank credit. Under that broad*
ceiling the individual commercial bank can operate
with freedom to extend credit for whatever purposes
and on whatever terms it wishes.
Here is where individual banker responsibility
comes into the picture. The traditional economic
responsibility of the banker is to exercise his best
efforts to distribute credit in such a way that the
most useful purposes are fulfilled. He attempts to
channel available funds into the most essential
activities and to withhold funds from less essen­
tial purposes. Programs sponsored by the Amer­
ican Bankers Association and other organizations
are stressing this most important responsibility.
As part of the Federal Reserve System, the
Federal Reserve Bank of St. Louis shares in the
major responsibility of the nation’s central bank,
the formulation of sound and appropriate monetary
policies to further the defense program. It is my

earnest hope that the bankers of the Eighth Dis­
trict will continue to cooperate with the Reserve
Bank and with each other in holding down credit
for less essential purposes while seeing, at the same
time, that the essential credit needs of the district
economy are met.
It should be pointed out that the financing of
defense production is an obviously desirable and
necessary undertaking.
So far the volume of
defense contracts in this district is not large, and
financing requirements therefore have not yet been
large. As defense work increases there will be
more need for financing. The V-Loan program
has been reactivated to provide guarantees on loans
to defense contractors who are called upon to
perform services or produce material and supplies
needed for the defense program. Again the Federal
Reserve banks have been designated as the instru­
mentalities of the guaranteeing agencies of the
Government. Eighth District banks are invited to
make use of this facility when needed and to dis­
cuss defense financing problems with our officers
and staff whenever their assistance can be useful.
Before concluding this discussion it seems appro­
priate to offer some comment on the problem of
continued economic development in this district
during the national emergency. The Federal
Reserve Bank of St. Louis has been working for
several years in the field of economic development
for the Eighth District. For the most part that
work has involved study of district problems and
encouragement of programs aimed at their solution.
The Bank has worked, primarily in cooperation
with other interested groups and organizations in
this field, to point out the benefits of sound indus­
trial development, better and fuller utilization of
the district’s resources, a balanced agriculture— in
short, to point out the need for higher district
income and various means to attain that goal.
Among the many organizations and groups with
which the Bank has worked are state bankers
associations, state universities, state development
organizations, both public and private, chambers
of commerce and various Federal agencies. It is
sincerely hoped that we will continue to enjoy
opportunities to cooperate with these bodies and
to take part in these development programs.
In connection with this subject I want to point
out three facts. First, the needs of the defense
program make it mandatory that resource develop­
ment for a particular region must at this time be
geared to the national interest and not exclusively
to regional interest.
In other words, regional
development programs must be shaped in the light




of national needs, and their impact on the national
economy must be considered more carefully than
would be the case in “ normal” peacetime situations.
Second, the requirements of the defense program
seem likely to run over an extended period of time.
The key to successful maintenance of a strong
defense economy is proper management and alloca­
tion of resources over the long term. It is vital to
choose among various short-run policy alternatives
those that will not impair long-run efficiencies in
the district. Of course, if we must engage in fullscale war it may become necessary to subordinate
long-run efficiencies to the hard business of sur­
vival. On the other hand, if we are to continue
the present type of mobilization program, a most
important factor is ability to sustain it and at the
same time keep the economy strong and healthy
not only during the emergency period but also
thereafter. As just one illustration of this point,
it is essential to maintain and enhance soil produc­
tivity in so far as possible for the long pull, despite
the temptation offered by high farm prices at any
given time to exploit the soil and mortgage its
future productivity.
Finally, sound development programs that will
strengthen the district economy for a long-term
defense effort and result in greater output from
the district are worthy financing projects for banks.
In providing such financing, individual district
bankers have the responsibility for (1) determin­
ing the soundness of particular projects, (2)
judging their desirability in view of the general
inflationary situation and selecting those projects
that will add most to the strength and productivity
of the economy, and (3) curtailing other less essen­
tial credit demands. By exercising their traditional
responsibility wisely Eighth District bankers can
make major contributions to both district develop­
ment and the national fight against inflation.
We have ahead of us, in this nation and in this
district, many perplexing problems that at times
seem almost imponderable. If the people of the
nation and the Eighth District work as conscienti­
ously as they have in the past, if bankers of the
nation and this district continue to discharge their
responsibilities as wisely and unselfishly as they
have in the past, these problems can be moved
toward solution. My abiding faith in the sound
sense, initiative, industry and courage of our people
gives me confidence to say that these problems
can and will be solved with benefit not only to
ourselves but to all mankind. The Federal Reserve
Bank of St. Louis stands ready and eager to do its
full share and more in that effort.
Page 31

MEMBER BANK EARNINGS
Bank earnings reached a new high in
The increase came as a result of
growth in total assets and fuller investment
of those assets plus a shift toward earning
assets with higher rates of return. Salary
and wage expenses were up in 1 9 5 0 . Other
expenses were slightly lower. Charge-offs
and reserves were less than in 1 9 4 9 .
Greater net earnings meant higher tax pay­
ments. However, net profits after taxes
were larger than ever before . Dividends
were larger and capital accounts were
increased.

SELECTED
E IG H T H

E A R N IN G S

REPORT

D IS T R IC T MEMBER
1939 - 19 50

ITEMS

BANKS

1950.

Earnings o f Eighth District member banks
reached a new high in 1950 .
Bankers will remember 1950 as a very good year.
Gross earnings of Eighth District member banks
were $123 million, almost $10 million above 1949
and the highest on record.1 Even with rising ex­
penses and taxes and substantial charge-offs and
transfers to valuation reserves, net profits were up
$2.7 million from 1949, reaching $30.6 million, which
equaled the previous record posted in 1946.
Eighth District member banks had $73 million
in operating expenses and paid $13.5 million in taxes
in 1950. The increase in expenses from 1949 was
$4.5 million and in taxes was $3.5 million. Chargeoffs on loans and securities and transfers to valua­
tion reserves for bad debt losses were $5.5 million
in 1950.
The increase came as a result o f growth in total
assets and fuller investment o f those assets • • •
Total assets of district member banks rose to $5.1
billion in 1950, up almost $90 million from 1949.
In addition the larger asset volume was more fully
invested in earning assets than in 1949. In 1950
the banks had 75.8 per cent of their total assets
producing income, either through investments in
United States Government securities or other
securities or through loans. The comparable ratio
for 1949 was 74.1 per cent.
• • • plus a shift toward earning assets with
higher rates o f return .
During the war years banks invested heavily in
Government securities. Total assets rose, the
amount of their Government security holdings rose,
and the proportion of assets in Governments in1 Figures and percentages used throughout this article are taken from
the annual study of operating ratios made by this Bank.
In computing
the aggregates and the ratios, the asset and liability items used represent
averages of figures from the call reports of December 31, 1949, June 30,
1950, and October 4, 1950. Darning and expense items are those
reported for the calendar year 1950. Ratios are arithmetic averages of
individual ratios of 494 member banks grouped in eight deposit-size
classes. Ratios computed in this way differ in some instances from the
ratios computed from aggregate dollar amounts.
Copies of the operating
ratio report m ay be obtained from the Research Department of the
Federal Reserve Bank of St. I,ouis.

Page 32




creased. By 1946, Government securities repre­
sented more than half (54.3 per cent) of total assets.
In 1947 a shift from Governments to loans and
other securities became evident. By 1949, total
assets were well below the war peak and Govern­
ment security holdings had dropped to 42.1 per
cent of total assets. In 1950, total assets were
larger than in 1949 (in fact were higher than in any
previous post-war year) but the share of such assets
in Government securities dropped further to 41.6
per cent.
The shift during the past year was primarily into
loans. Loan volume increased substantially (to a
new all time high) and the ratio of loans to total
assets rose from 24.9 per cent in 1949 to 26.9 per
cent in 1950.
Loans earn a higher rate of return than do Gov­
ernment securities. In both 1949 and 1950 the
average rate of return on loans was 5.5 per cent
and on Governments 1.8 per cent. Thus a shift
from Government securities to loans would auto­
matically increase gross income. Add to that an
absolute rise in total assets and a more fully in­
vested position and an even larger increase in earn­
ings results. In 1950 district member banks earned
2.69 per cent on total assets; in 1949 the figure was
2.54 per cent.
As a result of the shift in the composition of bank
assets, income from Government securities, which
had represented 31 cents of each income dollar in
1949, represented only 29.4 cents in 1950. Income
from loans represented 53.4 cents of each income
dollar in 1950, compared to 51.4 cents in 1949.
Salary and wage expenses were up in 1950 .
The cost of operating a bank was higher in 1950
than in 1949. When all expenses were added to­
gether they represented 60.5 cents of each income

dollar in 1950, slightly more than the 60.4 cents of
1949.
The entire increase was reflected in payments for
salaries and wages. In 1949, 29.2 cents of each
dollar of income went for salaries and w ages; in
1950, these purposes took 30.2 cents.

OF

THE
INCOME
EIGHTH
DISTRICT

DOLLAR
MEMBER
USE

SOURCE
OTHER
S E R V IC E
OTHER

IN C O M E ,
CHARGES,
S E C U R IT IE S ,

7C
R E T A IN E D ,

5$

Charge-offs and reserves were less than in 1949.
Banks are permitted under Federal tax law to set
up reserves within certain limits tax free for bad
debt losses on loans. Under the accounting method
used, transfers to valuation reserves on loans are
included with charge-offs and transfers from the
account are included with recoveries. District
member banks charged off 4.1 cents of each dollar
in 1950. About 2.5 cents of this represented trans­
fers to valuation reserves. The dollar amount
transferred to this account in 1950 was $3.3 million
— a drop from the $4 million of 1949. The table
shows net transfers to valuation reserves by
deposit-size groups for the years 1950 and 1949.
A D D IT IO N S TO V A L U A T IO N R E SE R V E S ON L O A N S
E I G H T H D I S T R I C T M E M B E R B A N K S , 1949-50
(T h o u s a n d s o f D o lla r s )
1949
1950
B a n k s w ith A v e r a g e D e p o s it s 1
$1,000,000 o r L e s s ........................................
$
10.0
$
4.7
$1,000,000 to $ 2 ,0 0 0 ,0 0 0 ............................
112.7
95.9
107.8
$2,000,000 to $ 3 ,0 0 0 ,0 0 0 ............................
228.8
218.8
$3,000,000 to $ 5 ,0 0 0 ,0 0 0 ............................
353.3
293.3
$5,000,000 to $ 1 0 ,0 0 0 ,0 0 0 ..........................
$ 1 0 ,000 ,00 0 to $ 2 5 ,0 0 0 ,0 0 0 .......................
428.2
355.6
298.1
449.4
$ 2 5 ,000 ,00 0 to $ 5 0 ,0 0 0 ,0 0 0 .......................
2,523.5
1,786.4
$50 ,000 ,00 0 and O v e r ...................................

111.0

A ll D is tr ic t M e m b e r B a n k s ..........................
$4,050.5
$3,327.0
1 D e p o s its w ere a v e ra g e d fro m three call rep orts m ade on
D e ce m b e r 31, 1949, J u n e 30, 1950, a n d O cto b e r 4, 1950.

Greater net earnings meant higher tax payments.
Income taxes paid by district member banks in
1950 were the highest of record. In dollar amount
they totaled $13.5 million, $3.5 million more than
in 1949. Of the income dollar income taxes took
8 cents whereas in 1949 they took 7.4 cents.
However9 net profits after taxes were larger than
ever before.

20C

6C
LOSSES

Other expenses were slightly lower .
Other bank expense items were slightly lower in
1950 than in 1949. One important bank expense
item is interest paid on time and savings deposits.
This expense did not contribute to higher bank
operating costs in 1950 for this cost was reduced
from 7.6 cents of dollar income in 1949 to 7.3 cents
in 1950. Remaining expenses consisted of fees paid
to directors, interest and discount on borrowed
money, taxes other than income taxes and deprecia­
tion. These expenses also were below 1949, con­
suming only 23 cents of each income dollar in 1950.
The previous year they had taken 23.6 cents.

BANKS

AND

R E S E R V E S ,4 C

D IV ID E N D S ,
GOVERNMENT

S E C U R IT IE S ,

8C

29 $
IN C O M E

TAXES,

EXPENSES,

8C

60$

1950

member banks still had more net profits than in
1949. As noted, net profits totaled $30.6 million,
$2.7 million above the $27.9 million in 1949.
Although more dollars were retained as net profits,
the proportion of the income dollar retained was
smaller, 27.4 cents as compared with 27.6 cents in
1949. In other words, that part of the income
dollar remaining as net profit in 1950 was smaller
than in 1949 but because of the greater number of
dollars involved total net profits were larger.
Dividends were larger . . .
District member banks paid an average dividend
of 3 per cent on total capital accounts, the same as
paid in 1949. The dollar total of dividends was
larger than in previous years as capital accounts
had been increased.
Stockholders received 7.8
cents of each dollar of earnings in 1950 compared
to 7.6 cents in 1949.
• . . and capital accounts were increased.

District member banks used net profits roughly
as follow s: a little over one-fourth went for divi­
dends— and about threefourths was retained to in­
crease capital structures. After capital accounts
were increased they equaled 7.1 per cent of total
assets in 1950. The year before they were 6.7 per
cent of total assets.
District banks increased
capital accounts at a faster rate than deposits.
Capital accounts rose from 7.2 per cent of total
deposits in 1949 to 7.8 per cent in 1950.
E. Francis De Vos

After all expenses were paid, transfers to valua­
tion reserves completed and income taxes remitted,




Page 33

Survey of Current Conditions
Month by month the cadence of economic activ­
ity in the Eighth District is being stepped up.
Activity in January was generally higher than in
December. Although slight declines in a few lines
were recorded, most district industries showed
gains at the end of January, 1951 as compared to
the preceding month. Defense work, allocations,
price and wage controls, and increased calls for
servicemen brought reminders of 1941-42. The
“ war-conscious” attitude spurred both consumers
and producers into greater activity. Early in Feb­
ruary, however, upward strides in industrial pro­
duction in this district were shortened by “ spot”
shortages of materials and by the railroad strike.
Output of manufactured goods in the nation also
increased in January, with most of the increase
coming in the durables. The Federal Reserve pro­
duction index rose 4 points over December, 1950
to an estimated 220 per cent of the 1935-39 average
for January. Steel production was high, running
about 2 million tons per week. Automobile pro­
duction totaled 650,000 units in January. Output
of most other consumer durable goods and building
materials was maintained close to the record levels
reached in the second half of 1950. Output of pro­
ducers equipment and munitions has shown sub­
stantial gains since last autumn. Production gains
in the nondurables group have not matched those
in the durable field. However, a sustained volume
of output 10 to 20 per cent above year-ago levels
has been maintained in textiles, paper, petroleum,
and chemical products.
In retail markets, consumers continued to buy
heavily in January, both in the district and the
nation. Total January dollar volume was less than
December’s Christmas buying, but was up sharply
from January of last year. Department store sales
during January, 1951 in the nation and Eighth Dis­
trict ran about one-third over January, 1950. A l­
though consumer demand was heavy, most items
were readily available.
Construction activity in the district and the
nation during January continued at a high level for
this time of year. In the district contracts awarded
advanced over December with residential, nonresidential, and utilities construction volume up
more than enough to offset the decline in public
works.
Page 34




Eighth District banks, as well as other businesses,
increased operations in January and early Febru­
ary. Loans increased and a record dollar volume
of checks was handled. As loans expanded and
bank deposits were used more rapidly, the rate of
money spending increased faster than production.
Upward pressure on prices continued here and
throughout the nation.
In the week ended February 20 the Bureau of
Labor Statistics wholesale price index remained
unchanged after 18 consecutive weeks of advance­
ment. Fourteen of these 18 weeks had each reg­
istered a new high over previously established
peaks. The advance brought the index to a level
1.9 per cent above January 23 and 16.9 per cent
above that which prevailed in the May 24-June 24,
1950 period.
EM PLOYM ENT

Total employment declined somewhat in both
district and nation during January. A decrease is
customary during this period, but this year it was
less than the usual seasonal decrease. The most
substantial drop in employment occurred in whole­
sale and retail trade. This, plus smaller declines
in construction and farm work, resulted in the re­
duction in total employment. Despite this loss,
however, employment in January was higher than
in any previous January on record.
Total manufacturing employment in the district
remained comparatively stable between December
and January. Although a few scattered layoffs re­
sulted from material and parts shortages, these
losses were balanced by gains in other manufactur­
ing lines. The railroad strike, which started the
last of January, was responsible for numerous short
layoffs in various manufacturing industries. These
layoffs ended when the strike ended early in Febru­
ary.
Unemployment in the district and in the nation
edged upward in January, following the normal
PR IC ES
W HOLESALE
Bureau of Labor
Statistics
(1926 = 100)

P R IC E S IN T H E

Jan.,’ 51 D e c .,*50

A ll Commodities.... 180.1
Farm Products.. 194.0
Foods.....................182.3

175.3
187.5
179.1
166.1

Jan.,’ 50
151.6
155.3
154.7
145.8

U N IT E D

STATES

January,
compared
D e c .,’ 50
+ 2 .7 %
+ 3.5
+ 1.8
+ 2.5

1951
with
Jan .,*50
+ 1 8 .8 %
+ 24.9
+ 17.8
+ 16.7

pattern. However, the rise was not as large as a
year ago when the number of unemployed workers
jumped by almost one-third. Considerably fewer
persons were seeking jobs this January than in
January of 1950 or 1949, but the number was
higher than in the 1943-48 period. The increase in
unemployment was not as large as the decline in
employment during January because seasonal
workers left the labor force.
In the seven district states, unemployment (as
measured by the volume of claims for unemploy­
ment compensation) was about 17 per cent higher
in mid-January than in mid-December but was only
half as large as in January a year ago. All the dis­
trict states had more claimants in January than in
December, with the largest gains in Mississippi and
Arkansas. In comparison with a year ago, Illinois,
Indiana and Missouri had the largest drop in the
number of unemployment compensation claimants.
In St. Louis City and County insured unemploy­
ment in January was a trifle higher than in Decem­
ber but was less than half as high as a year ago.
Employment in the St. Louis area was off slightly
in January as losses in the trade, construction and
service industries overshadowed gains in the man­
ufacturing industry. In manufacturing, employ­
ment was up in the metalworking industries and
down seasonally in the nondurable goods indus­
tries. January employment was about 6 per cent
higher than in January, 1950 and 45 per cent higher
than in January, 1940.
In the Louisville area, the Department of Eco­
nomic Security reported that employment expan­
sion there might be leveling off. The gain of about
1,400 workers between November and January was
smaller than in any two-month period of last year.
Employment declined somewhat between Decem­
ber and January as temporary salespersonnel was
laid off and some construction workers were made
idle by bad weather. Between November and
January, losses in the food, furniture, construction,
retail trade and transportation industries were more
W H O L E S A L IN G

Line of Commodities
Data furnished by
Bureau of Census
U . S. Dept, of Commerce*
D rugs and Chemicals..................................
D ry Goods........................................................
Groceries...........................................................
Tobacco and its Products..........................
Miscellaneous...................... ...........................

N et Sales
January, 1951
compared with
D e c .,’ 50 Jan.,’ 50
+ 10%
+ 19%
+ 83
+ 47
+ 33
+ 8
+ 9
+ 70
- 0+ 20
+ 13
+ 43
+ 17%
+ 47%

**T o ta l A ll Lines.....................................
* Preliminary.
**Includes certain items not listed above.




Stocks
January 31, 1951
compared with
January 31, 1950
+
+
+
+
+
+

43%
47
28
26
21
48

+ 34%

than offset by increases in the tobacco, chemicals,
primary metals, nonelectrical machinery and Gov­
ernment industries.
IN D U S T R Y

Most district industries reported higher produc­
tion for January, 1951 than in the preceding month
or the corresponding month a year ago. Slight de­
clines were registered in coal and oil production,
however.
Daily average power consumption at leading dis­
trict cities was 5.7 per cent less than in December.
It was 17.5 per cent over January, 1950, however.
Largest total gains relative to December were
registered for the leather, paper, and fabricated
metals industries, while the textile, electrical ma­
chinery, and stone, clay, glass industries used
smaller amounts of electrical power.
In January, 1951 the Terminal Railroad Associa­
tion of St. Louis interchanged about 22,000 more
loads for 25 railroads at St. Louis than in January,
1950, and about 5,000 more than in December,
1950. However, the strike late in January and early
in February cut the number of interchanges in the
first nine days of February to 9,700 loads as com­
pared to the 30,000 or more expected from normal
traffic.
The St. Louis area steel industry scheduled oper­
ations in January at 85 per cent of capacity. This
rate was 2 per cent above December and 6 per cent
above January, 1950. Operations were scheduled
at about 86 per cent of capacity for the first two
weeks of February.
Lumber production in the district increased in
January over the previous month. After the yearend holidays, producers pushed weekly average pro­
duction above the levels of early December.
For January the production index of southern
pine was 204 compared to 188 in December, and
__________________________ IN D U S T R Y _____________________
C O N S U M P T IO N O F E L E C T R IC IT Y
Jan.,
January, 1951
Jan.,
D ec.,
compared with
( K .W .H .
1951
1950
1950
D e c.,’ 50
Jan.,’ 50
in thousands) K .W .H .
K .W . H .
K .W .H .
15,874
14,133
15,776
+ 1 2 .3 %
+ 0 .6 %
Little Rock...
13,487*
5,913
5,210
+ 16.3*'*'
81,314
81,163
69,925
+ "o .2“”
Memphis.......
+ 8.2
28,089
28,546
25,952
— 1.6
9,182
—
2.6
+ 43.7
9,427
6,389
+ 26.8
101,721
101,392
80,221
+ 0.3
+ 2 2 .7 %
249,667
203,473
+ 3 .8 %
240,574
*— 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 S T . L O U I S
First Nine D ays
Jan.,’ 51
D ec.,’ 50
Jan.,’ 50
F e b .,’ 51
F e b .,’ 50
1 m o.’ 51
1 m o.’ 50
121,922
116,662
99,462
9,703*
31,445
121,922
99,462
Source: Terminal Railroad Association of St. Louis.
*— Strike.
C R U D E O IL P R O D U C T IO N — D A IL Y A V E R A G E .
January, 1951
(In thousands
Jan.,
D ec.,
Jan.,
compared with
o fb b ls.)
1951
1950
1950
D ec., ’ 50
Jan.,’ 50
Arkansas...........
80.8
81.6
77.2
— 1%
+ 5%
Illinois................
165.1
169.3
178.7
— 2
— 8
Indiana..............
29.4
30.4
27.7
— 3
+ 6
K entucky..........
30.2
30.5
26.5
— 1
+14
Total..............
305.5
311.8
310.1
— 2%
— 1%

Page 35

191 in January, 1950. This figure was higher than
for any January since 1944 (as far back as recorded
here) but was somewhat below the annual average
for 1950 (206). Favorable January weather helped
operations, but production dropped sharply during
the first week of February because of poor weather
and transportation difficulties. Southern hardwood
production for January, 1951 was 89 per cent of
capacity, a 4 per cent advance over December,
1950, and 11 per cent over a year ago.

Coal and Oil Output Declines Slightly
District coal production totaled 9.7 million tons
in January, about 9 per cent less than in December.
Total district production was well above the 6.6
million tons of January, 1950, a period of interrupted
work, but about equal to production in January,
1949. All district states reported smaller produc­
tion compared to December, 1950. District produc­
tion was 22 per cent of total United States coal
production— about the usual share.

National Stock Yards receipts and shipments of
livestock in January were larger than in December
or in January a year ago. Total receipts in Janu­
ary, 1951 exceeded January, 1950 by 5 per cent,
shipments by 8 per cent. Compared to December,
receipts and shipments were larger in all divisions
with hogs and sheep showing largest gains.

One development of industry-wide interest was
the Office of Price Stabilization regulation, effec­
tive February 1, which permitted a rise of 90 cents
a ton in the ceiling price of anthracite and 25 cents
a ton for bituminous coal to cover higher costs
resulting from the wage increase authorized by the
Wage Stabilization Board.
District crude oil production in January was 2
per cent below that of December, with all four
of the district’s oil producing states reporting slight
declines. Daily average crude oil production for
the four district states was 305.5 thousand barrels.
This was smaller than December, 1950 (311.8) or
January, 1950 (310.1). The January, 1951 figure was
also slightly smaller than that for any month of
1950. Production was expected to gain in late Janu­
ary and early February, however.

Federally inspected slaughter of meat animals
in the St. Louis area totaled 498 thousand head in
January, 1951, 4.5 per cent less than December but
5 per cent above January, 1950.
Fifty-one of Kentucky’s distilleries were in opera­
tion at the close of business in January. This was
the same number as was operating at the end of
December, 1950 but was considerably larger than
the 35 producing a year ago. Production again is
fully in terms of whiskey, even though warehouse
stocks are high. Since December, distillers have not
been requested to produce alcohol for the Govern­
ment because adequate stocks are on hand to meet
current production needs. Anticipations are for no
more requests for alcohol for several months, since
new arrangements for the importation of alcohol
distilled from molasses (which is cheaper than
grain alcohol) have been completed by the Govern­
ment.
The Eighth District shoe industry produced 6.3
million pairs of shoes in November, 1950, about 17
per cent of the U.S. total. This figure was lower
than the 7.8 million pairs produced in October, but
it exceeded production in November, 1949 by 1
million pairs. Production was high during Decem­
ber and January. The large St. Louis firms, pro­
ducing all leather boots and shoes, continued to
receive substantial orders from the armed forces.

In the first part of February new wells were
proven in the Olney district, and the new field there
shows promise of becoming a large producer.
C O N S T R U C T IO N

Nationally, $2.1 billion worth of new construc­
tion was put in place in January as compared with
$2.2 billion in December and $1.7 billion a year ago.
Between December and January new construction
increased in industrial, farm, public residential and
nonresidential, and military and naval fields. Sharp
increases over last January were reported for indus­
trial, commercial, and military and naval construc­
tion. Smaller increases over the past year were
recorded for residential, public utility and total
public construction.
Construction was started on more new homes in
the U. S. this January than in the same month of
any previous year. The 87,000 new nonfarm dwell-

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

C O N S T R U C T IO N

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
______________ U n a d ju ste d ______________ ___________
A d ju ste d _______________
Jan. , ’ 51
D e c .,’ 50
J a n .,’ 50 J a n .,’ 51
D e c .,’ 50
Jan .,’ 50
207*
107
155*
199*
92~
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
______________ U n a d ju sted ______________
__________ A d ju ste d _______________
N o v .,’ 50
O c t . , ’ 50
N o v .,’ 49 N o v ., ’ 50
O c t .,’ 50
N o v .,’ 49
180*

127*
158R
R — R ev ised.
*— P relim in ary.

Page 36




103

129*

" 163R

104

B U IL D IN G P E R M IT S
M onth of January
N e w C o n s tru ctio n
( C o s t in
th o u sa n d s)
E v a n s v ille .............
L ittle R o c k ...........
L o u is v ille .............
M e m p h is ................
St. L o u is ...............
J a n .,’ 51 T ota ls....
D e c .,’ 50 T o ta ls...

N um ber
C o st
1951 1950
1951
1950
28
45 $
94 $
131
91
89
2,758
1,043
192
151
2,290
1,909
1,868 1,186
3,642
1,439
225
190
3,964
1,363
2,404 1,661 $12,748 $ 5,885
2,502 2,261 $18,196 $10,483

R ep a irs, etc.
C ost
N um ber
1950
1950 1951
1951
36 $
76 $ 36
50
147
117
140
143
79
50
42
49
104
178
105
575
657
651
196
154
613
480 $1,534 $958
410
425 $1,563 $698

ing units started in January was about 8 per cent
less than in December. This was due entirely to a
drop in public housing for privately owned housing
rose by 5 per cent between December and January.
The dollar volume of construction contracts
awarded in the St. Louis territory (whicl^ includes
most of the Eighth District) continued to climb
between December and January. The $39.6 mil­
lion in contracts awarded during January was 4
per cent above December and 43 per cent more
than in January, 1950, according to F. W . Dodge
reports.
The 37 states covered by the Dodge reports pre­
sented a somewhat different picture. The dollar
volume of contracts awarded in these states was 11
per cent lower in January than in December. The
gain over January, 1950 was about the same as in
the St. Louis territory.
More contracts were awarded for residential, non­
residential and utilities construction in the St. Louis
territory in January than in December, but the con­
tracts for public works fell off substantially. Most
of the gain over the past year occurred in nonresi­
dential building, where more than twice as many
contracts were awarded in January, 1951 as in
January, 1950. Comparing January, 1951 with the
same month a year ago residential and utilities con­
struction was somewhat higher but the volume of
public works was less.
TRADE

January's heavy consumer buying, after a highly
successful Christmas season, came as a surprise to
district retailers. Fear of future shortages plus
active promotion of the seasonal “ white” sales re­
sulted in very substantial buying. Apparel (par­
ticularly woolens), shoe and fur sales in January
were substantially larger than normal. Appliances,
furniture and homefurnishing sales, as in mid-1950,
increased materially. New automobile demand also
was strong.
Despite the unanticipated strength of demand,
merchants were fairly well prepared for the en­
larged sales volume. At the end of December,
1950, with few exceptions, inventories were higher
than usual. Some new autos and some brand name
appliances were on an allotment basis but for the
most part the merchandise consumers desired was
available.
Department Stores— District department store
sales during January were 34 per cent larger than
in January, 1950. Sales declined from December to
January but less than the usual, seasonal amount.
On an adjusted basis daily average district sales
were 363 per cent of the 1935-39 average, a record




TRADE
DEPARTM ENT
_______ N et Sales
January, 1951
compared with
D e c .,*50
Jan .,’ 50
8th F. R. District..
F t. Smith, A rk .1....
Little Rock, Ark....
Quincy, 111................
Evansville, Ind......
Louisville, K y .........
St. Louis Area 2.....
St. Louis, M o .....
Springfield, M o ......
Memphis, Tenn......
*A11 other cities.....

— 44%
— 53
— 47
— 44
— 52
— 53
— 38
— 37
— 50
— 47
— 50

STORES
Stocks
on H and

Stock
Turnover

Jan. 31, 1951
comp, with
Jan. 31, 1950

Jan. 1, to
Jan. 31,
1951
1950

+34%
+36
+34
+48
+52
+36
+31
+31
+41
+34
+60

+25%
+20
+35
+15
+29
+23
+28
+28
+22
+12
+21

.31
.29
.28
.33
.26
.32
.32
.32
.24
.34
.21

.29
.27
.27
.22
.20
.29
.32
.31
.20
.29
.17

*Fayetteville, A r k .; Harrisburg, M t. Vernon, 111.; Vincennes, I n d .;
Danville, Hopkinsville, M ayfield,
Paducah, K y . ;
Chillicothe, M o . ;
Greenville, M is s .; and Jackson, Tenn.
xIn 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 non-department stores, however, are not
used in computing the district percentage changes or in computing
department store indexes.
2Includes St. Louis, Clayton and Maplewood, M o . ; A lton , Belleville,

HL

Outstanding orders of reporting stores at the end of January, 1951,
were 45 per cent greater than on the corresponding date a year ago.
Percentage of accounts and notes receivable outstanding January 1,
1951, collected during January, by cities:
Instalment Excl. Instal.
Accounts
Accounts
Fort Smith.... — %
47%
Little Rock.... 15
40
Louisville...... ... 19
50
Memphis........... 19
45
IN D E X E S

OF

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

20%
20
10
19

60%
54
44
50

D E P A R T M E N T STOR E SALES AN D STOCKS
8th Federal Reserve District
Jan.,
D ec., N ov.,
Jan.,
1951
1950
1950
1950
298
363
290
337

Stocks,

540
353
320
381

398
316
400
374

232
282
248
288

3Daily Average 1 9 3 5 -3 9 = 1 0 0 .
4End of M onth Average 1 9 3 5 -3 9 = 1 0 0 .
S P E C IA L T Y ST O R E S
Stocks
_______ N et Sales____________on H and

Stock
Turnover

January, 1951
January 31, 1951
compared with
comp, with
D e c.,*50
Jan.,*50 Jan. 31, 1950

Jan. 1, to
Jan. 31,
1951
1950

M en’s Furnishings....— 4 5 %
+36%
+30%
.22
.21
+18
+20
.30
.30
Boots and Shoes........ — 45
Percentage of accounts and notes receivable outstanding January 1,
1951, collected during January:
M en’s Furnishings....................... 4 6 %
Boots and S h o e s .......................... 4 7 %
Trading days: January, 1951— 2 6 ; December, 1950— 2 5 ; January, 1950
— 25.
R E T A IL F U R N IT U R E S T O R E S **
N et Sales
Inventories
Jan., 1951
compared with
D e c .,’ 50 Jan.,’ 50

Ratio

Jan. 31, 1951
r i l o f.
compared with
Collections
Dec. 3 1 /5 0 Jan. 3 1 /5 0 J a n ./5 1 J a n ./5 0

8th Dist. Total1... — 3 4 % + 2 2 %
+ 2%
+42%
20%
20%
St. Louis Area2... — 36
+25
+ 4
+42
25
26
St. Louis...........— 36
+23
+ 4
+42
25
26
Louisville Area3.. — 32
+36
+ 2
+37
15
14
Louisville..........— 34
+29
+ 2
+39
15
13
Memphis................ — 20
+12
— 5
+33
13
12
Little Rock........... — 34
— 3
-0 +37
19
16
Springfield............ — 8
+83
— 1
+46
14
16
Fort Smith........... — 36
+17
*
*
*
*
* 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, Fort
Smith and Pine B luff, A rkansas; Hopkinsville, Owensboro, K e n ­
tucky; Greenville, Greenwood, M ississippi; Hannibal and Springfield,
M issouri; and Evansville, Indiana.
2 Includes St. Louis, M issou ri; East St. Louis and A lton , Illinois.
8 Includes Louisville, K entucky; and N ew Albany, Indiana.
**41 stores reporting.
PERCENTAGE

D IS T R IB U T IO N

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

OF

F U R N IT U R E

SALES

J a n ./5 1
17%
83

D e c ./5 0
19%
81

Jan., ’ 50
15%
85

100%

100%

100%

Page 37

high for January. In comparison, adjusted sales
during December were 353 per cent of the fiveyear base and in January, 1950 they were 282
per cent.
In St. Louis department stores January sales of
women’s and misses’ accessories and apparel totaled
22 per cent larger than a year ago. Men’s and boys’
wear sales volume was 34 per cent larger. House­
furnishings sales were 41 per cent above those in
1950.
Specialty Stores— St. Louis women’s specialty
store sales during January were 15 per cent less
than in December but were 39 per cent larger than
in January, 1950. Men’s wear store sales in the
district were 45 per cent less than in the previous
month and were 36 per cent larger than last year.
The value of inventories held by St. Louis women’s
specialty stores on January 31 was 17 per cent
larger than on December 31 and was slightly larger
than on January 31, 1950. District men’s stores on
January 31 held slightly larger inventories than a
month previous and 30 per cent more than a year
ago.
Furniture Stores— District furniture store sales
during January were 34 per cent less than in
December but were 22 per cent larger than in Janu­
ary, 1950. Inventories at the end of January were
slightly larger than on December 31 and 42 per cent
larger than on January 31, 1950.
AGRICULTURE

Production goals for 1951 crops have been an­
nounced by the Secretary of Agriculture. These
goals emphasize the need for increased output of
corn, wheat, cotton and rice, all of which are pro­
duced in important quantities in the Eighth District.
The production goal for cotton is 10 million acres
more than 1950 planted acreage, an increase of 53
per cent. An increase of nearly 7 per cent in corn
acreage is requested to boost corn production for
1951 to about 3.5 billion bushels. An increase of
17 per cent in rice acreage is asked. The spring
wheat acreage goal is up 16 per cent from 1951.
Planted acreage of winter wheat is 6 per cent above
that in 1950 for the nation, and in district states is
7 per cent larger.
Production goals of other important crops grown
in the district have been lowered from 1950 levels.
The 1951 goal for oats is 3 million acres less than
in 1950, a reduction of nearly 7 per cent. A 2 per
cent reduction in soybean acreage also has been
requested.
Farm Price Control— The general price freeze
announced by the Government on January 26 did
Page 38




not apply to most farm products. The regulation
provided that prices in general were to be frozen at
the highest level prevailing between December 19,
1950 and January 25, 1951. It was anticipated that
the so-called freeze would apply only until actual
dollar and cents ceilings could be worked out for the
thousands of articles under control. But prices of
many farm commodities were specifically exempted
from the freeze, since other legislation forbade ceil­
ings on farm commodity prices below the highest
price calculated in any of three ways: (1) parity,
(2) highest price received during May 24-June 24,
1950, or (3) the “ adjusted price” . The adjusted
price is calculated for all commodities not being sold
in the May 24-June 24 period. It is the average
price received during the last representative period
when the commodity was sold, adjusted to the May
24-June 24 price level for all farm commodities.
Prices of some important farm products (beef,
pork, veal, wool, lamb, cotton, cottonseed, flue
cured tobacco, soybeans and rice) already were
above any of the legal minimum ceilings when
the general freeze order went into effect and thus
are under the terms of that order — the highest
price prevailing from December 19, 1950 to Jan­
uary 25, 1951. Many farm commodity prices, how­
ever, were still below legal minimum ceilings
during the price freeze base period and thus can
rise to those minimums before being controlled.
The table shows for selected farm products the
January 15, 1951 price and the legal minimum ceil­
ings.
M ANY

A G R IC U L T U R A L P R IC E S A R E N O T Y E T U P T O T H E
M IN IM U M C E IL IN G L E V E L
I^egal Per cent prices received
Prices received
above or b<
minimum
U nit
Jan. 15, 19 5 11 ceiling Jan. 152 legal minin
W o o l................ lb.
$ 0.98
$ 0.56
+ 74%
5.05
Cottonseed.... cwt.
3.55
+ 42
lb.
0.41
0.33
+ 25
26.40
cwt.
30.00
+ 14
27.00
23.80
Beef Cattle.... cwt.
+ 13
30.80
28.30
Veal Calves... cwt.
+ 9
cwt.
5.55
5.36
+ 4
cwt.
20.00
20.60
— 3
bu.
2.90
3.06
— 5
4.62
4.40
M ilk................. cwt.
— 5
lb.
0.68
0.74
— 9
bu.
1.54
1.71
— 10
bu.
2.09
2.35
— 11
lb.
0.34
0.39
— 12
doz.
0.52
0.42
— 18
lb.
0.24
0.30
— 20
bu.
0.99
1.76
— 44
box
1.26
3.58
— 65
Source: Agricultural Prices (Supplement) B .A .E ., January, 1951.
1Prices received by farmers.
2H ighest of three prices: (1 ) parity, (2 ) highest price received during
M ay 24-June 24, 1950, or (3 ) in case no market was active during
M ay 24-June 24, 1950, the average price received during most recent
representative period prior to M ay 24, adjusted to the M ay 24-June 24
level of farm prices.

The table indicates that prices of many commodi­
ties could move up under existing regulations. If
they all increased to the legal minimum ceilings
there would be a general increase of 5 or 10 per
cent in prices received by farmers. Many of these
items are now approaching the minimum ceiling.
However, important food commodities such as milk,

eggs, potatoes, vegetables for canning, citrus and
deciduous fruits are substantially below minimum
ceilings. Prices of potatoes could nearly double
before being controlled. Prices of grapefruit and
oranges could more than double.
# It should be pointed out that the use of parity as
a measuring rod for legal minimum ceilings itself
gives some latitude to further farm price increases.
Price increases in items the farmer buys (including
interest, taxes and wages) automatically raise par­
ity prices. Thus the parity price is not necessarily
fixed, but can rise and with it the legal minimum
ceiling might also rise (if the parity price were the
highest of the three farm price ceiling determi­
nants).
Some time and considerable work is necessary
in translating the freeze order to prices for specific
commodities, for different grades, at different
places, and at different times of the year. Other
factors also have to be taken into consideration.
Strong pressure is being exerted to have the ceiling
on raw cotton either removed entirely or set at
$0.45 a pound to encourage production. Similarly,
prior to the freeze order the CCC contracted to buy
1951 wool at a price higher than the December 19January 25 level. Ceilings on livestock will need
to be at a level that permits profitable feeding in
relation to corn if livestock production gains are to
take place. Feed supplies will limit the increase
in livestock production.
BANKING

Bank lending continued to increase in January
and early February in this district and in the nation.
Loan growth, uncommon at this time of year,
occurred despite higher reserve requirements and
a generally tighter money market. The banks liqui­
dated Government securities in considerable volume
and borrowed from the Reserve Banks to obtain
funds. The Federal Reserve System bought sub­
stantial amounts of the securities sold by the banks
AGRICULTURE
CASH FARM
D ec., 1950

IN C O M E
12 month total Jan. to date

compared with
(I n thousands
of dollars)

D ec.,
1950

N o v .,
1950

Arkansas....... $ 54,840 — 4 5 %
14
147,900
Illinois............
82,977 — 11
Indiana..........
K entucky......
108,036 + 203
45,501 — 51
Mississippi....
M issouri........
102,392 — 10
57,189 +
4
Tennessee.....

__

Totals.........
R E C E IP T S

$598,835 —
AND

10%

+
+
+
+
+
+
+

1 6%
14
15
2
41
27
23

+ 1 7%

S H IP M E N T S A T
Receipts

Jan.,
1951
Cattle and calves... . 85,885
H o g s ........................... . 333,913
Sheep.......................... . 40,047
Totals.................... . 459,845




1950
compared with

D ec.,
1949

1950
486,345
1,720,080
940,791
514,236
445,783
1,009,281
420,360

— 9%
— 1
—2
—4
—9
- 0— 3

—
—
—
—
—
—
—

$5,536,876

— 3%

— 11%

$

N A T IO N A L

January, 1951
compared with
D e c.,*50 Jan.,’ 50

Jan.,
1951

1949

1948
15%
8
10
13
17
8
16

STOCK Y A R D S
Shipments
January, 1951
compared with
D e c .,’ 50 Jan.,’ 50

+ 4%
+ 10
+ 19

— 8%
+12
— 15

24,105
98,205
8,236

+ 5%
+ 43
+ 49

— 11%
+16
— 10

+ 10%

+ 5 %

130,546

+ 34%

+

8%

and prices and yields of Governments showed little
change over the period. Other money market rates
stiffened some, however. Pointing up the strong
inflationary situation, the dollar volume of checks
cashed (as reflected in debits figures) was higher
in January than in December, a most unusual devel­
opment at this season.
Total loans at weekly reporting banks in this
district rose $6 million in the first six weeks of the
year. During the same period in four of the five
previous years, loans declined. This year’s loan
expansion resulted mainly ffom growth in commer­
cial loans, partly offset by a decline in “ other”
(largely consumer) loans. Commercial loan ex­
pansion was $7 million in the six weeks, in con­
trast to the usual seasonal decline in such loans at
this time of year. On the average, that decrease
in the postwar years has been about $9 million in
the six-week period. The increase this year cen­
tered in St. Louis and Louisville. At Memphis,
business loan volume dropped but by less than the
usual seasonal amount. Consumer loans decreased
seasonally, loans on securities also declined, while
loans on real estate remained unchanged.
The loan expansion occurred despite an increase
in reserve requirements of roughly $50 million for
the weekly reporting member banks. Also, the
banks added somewhat to their holdings of longerterm securities. T o obtain the funds for these pur­
poses the banks liquidated shorter-term securities
and reduced cash assets.
Nationally the banking picture was about the
same as in the Eighth District. In the first six
weeks of 1951 all weekly reporting banks expanded
commercial loans $500 million. However, nation­
ally real estate and consumer loans were up slightly
in contrast with the District.
DEBITS TO D E PO SIT ACCOUNTS
(In thousands
of dollars)
E l Dorado, A rk .............. $
Fort Smith, A rk ............
Helena, A rk.....................
Little Rock, A rk ............
Pine Bluff, A rk ...............
Texarkana, A r k .* ..........

Jan.,
1951

D ec.,
1950

Jan.,
1950

January, 1951
compared with
D e c .,’ 50 Jan.,’ 50

28,530 $
30,038 $
22,096
47,443
46,551
40,204
9,812
10,766
6,726
149,021
153,211
121,510
34,899
38,080
27,387
14,128
13,494
10,828
29,957
29,702
23,216
E .S t .L .-N a t .S .Y ., HI...
142,171
124,269
103,761
Quincy, 111........................
35,910
32,621
27,806
Evansville, Ind...............
140,752
138,076
113,537
Louisville, K y .................
667,543
666,009
493,199
Owensboro, K y ...............
50,406
45,884
38,891
Paducah, K y ......... .........
17,800
19,150
14,166
Greenville, M iss..............
31,127
24,204
27,784
Cape Girardeau, M o .....
14,658
10,924
12,694
10,088
9,056
Hannibal, M o .................
7,928
Jefferson City, M o ........
63,608
46,377
56,088
St. Louis, M o ................. . 2,009,686
1,532,231
1,869,615
12,141
12,003
9,219
63,823
52,258
Springfield, M o ..............
70,255
23,041
22,619
18,967
Jackson, Tenn................
818,656
583,172
745,335
Memphis, Tenn..............
,$4,421,632 $4,157,157 $3,338,318
* These figures are for Texarkana, Arkansas only.
banks in Texarkana, Texas-Arkansas, including banks
District, amounted to $32,544.

+ 29%
— 5%
+ 18
+ 2
— 9
+ 46
— 3
+ 23
— 8
+ 27
+ 30
+ 5
+ 29
+ 1
+ 14
+ 37
+ 29
+ 10
+ 24
+ 2
+ 35
- 0+ 10
+ 30
— 7
+ 26
+ 12
+ 29
+ 34
+ 15
+ 27
+ 11
+ 37
+ 13
+ 7
+ 31
+ 1
+ 32
+ 10
+ 34
+ 2
+ 21
+ 10
+ 40
+ 6%
+ 32%
Total debits for
in the Eleventh

Page 39

banks in the last week of the month, and $300 mil­
lion for country banks on February 1. In the five
weeks ended January 31, System net purchases of
United States Government securities exceeded $1
billion. The prices of Government obligations
showed little change on balance over the period,
although the liquidation of such securities by banks
was sizable.

The reserve position of member banks in the first
six weeks of the year was influenced primarily by
increases in legal reserve requirements. The vol­
ume of reserves needed to meet the increase was
roughly $2.1 billion— about $1.2 billion for all mem­
ber banks in mid-January, $600 million for city

D E B IT S

TO DEPO SIT

ACCOUNTS

The tight reserve position of member banks in
January was accompanied by a firming of interest
rates, other than on Governments. In January,
rates on bankers acceptances were increased 3/16
per cent and the prime commercial loan rate at New
York banks was increased *4 per cent. At mid­
month the typical rate on 4 to 6 months prime
commercial paper had increased J
/i~A Per cent.

EI GHTH
DI ST RI CT
22
S E L E C T E D CITIES
M O N TH LY
B ILLIO N S

BILLIONS

A further indication of the upward trend in bank
activity was to be found in the accelerated use of
bank deposits. Debits to deposit accounts at 22
selected cities in the Eighth District reached $4.4
billion in January— 32 per cent more than in Janu­
ary, 1950. More significant was the fact that the
debits in January were 6 per cent more than in
December, 1950. This increase sharply reverses
usual experience of the preceding 24 years when
debits in January averaged 8 per cent less than in
December. In the 24-year period there were only
two instances of increase. Nationally, in leading
cities, debits in January were 30 per cent above a
year ago.
1948

1949

1950

1951

E IG H T H
M EM BER

BANK
BY

D IS T R IC T

ASSETS

SELECTED

AND

L IA B IL IT IE S

GROUPS

Change fr o m :

Change from :

(In Millions of D ollars)

3.

Assets
Loans and Investm ents.............................. .......
a. Loans.............................................................
b. U .S . Government O bligations...........
c. Other Securities........................................
Reserves and Other Cash Balances.......
a. Reserves with the F .R . bank..............
b. Other Cash Balances3............................
Other A ssets....................................................

4.

Total A ssets......................................................

1.

2.

5.

6.
7.
8.

Liabilities and Capital
Gross Demand Deposits.............................
a. Deposits of B anks................................... .
b. Other Dem and D eposits.......................
Time Deposits..................................................
Borrowings and Other Liabilities..........
Total Capital Accounts................................

Jan., 1951
$4090
1847
372
1345
684
661

718
3382
77

D ec., 1950
to
Jan., 1951

Smaller Banks2

Large City Banks1

A ll Member
Jan., 1950
to
Jan., 1951

Jan., 1951

D ec., 1950
to
Jan., 1951

Jan., 1950
to
Jan., 1951

Jan., 1951

Change fr o m :
D ec., 1950
Jan., 1950
to
to
Jan., 1951
Jan., 1951

$— 41
—
3
— 38
-0 — 91
+ 53
— 144
+
2

$+
+
—
+
+
+
+
+

134
357
244
21
102
97
5
11

$2432
1292
955
185
841
458
383
30

$— 31
+
1
— 32
-0 — 74
+ 40
— 114
+
2

$ + 89
+ 292
— 217
+ 14
+ 95
+ 79
+ 16
+
5

$1658
579
892
187
504
226
278
20

$— 10
—
4
—
6
-0 — 17
+ 13
— 30
-0 -

$+
+
—
+
+
+
—
+

45
65
27
7
7
18
11
6

$— 130

$ + 247

$33 03

$— 103

$ + 189

$2182

$—

$+

58

$— 151
— 89
— 62
+
2
+ 19
-0 -

$ + 170
— 28
+ 198
+
2
+ 51
+ 24

$2548
678
1870
490
71
194

$— 121
— 85
— 36
-0 + 19
i

$ + 127
— 28
+ 155
+
1
+ 51
+ 10

$1552
40
1512
484
6
140

$— 30
__
4
— 26
+
2
-0 +
1

_

27

$ + 43
-0 + 43
+
1
-0 + 14

$ + 58
$2182
$— 27
$ + 189
$— 103
9. Total Liabilities and Capital Accounts.
$+247
$3303
$5485
$— •130
1 Includes 15 St. Louis, 6 Louisville, 3 Memphis, 3 Evansville, 4 Little Rock and 4 E ast St. Louis-N ational Stock Yards, Illinois, banks.
2 Includes all other Eighth District member banks. Some of these banks are located in smaller urban centers, but the majority are rural area banks.
8 Includes vault cash, balances with other banks in the United States, and cash items reported in process of collection.

Page 40