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v

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March, 1954

The

Eighth

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n

Voliune X X X V I

v
Number 3

District’ s Climate

^CORDING to a classification of the world’s climates, the Eighth Dis­
trict is located in the relatively favorable middle latitude climate of
short winters and long summers, having a generally advantageous rainfall
pattern.
Temperature averages throughout the district are uniformly hot in summer,
but vary 24 degrees in winter. Reflecting these factors and others, the dis­
trict can be divided into colder and warmer climatic zones, although many
of the weather features are irregular. The climates of certain district cities
illustrate the differences between the two zones.
Seasonal changes vitally affect agriculture and business in the district.
Despite recent dramatic weather changes throughout the world, the district’s
basic climate will probably remain much the same.

Eighth District Membi
Earnings and Ei
Survey of Current Coi




MAJOR

CLIMATIC
(AFTER

REGIONS

W KOPPEN)
.

{ Tropical Rainy Climates
2
jjS fll

Dry Climates (Desert and Steppe)

3 Warm Temperate Rainy Climates
4 Cold-snowy Forest Climates

I

5 Polar Climates

Source: Simplified adaptation of a Koppen mn.p
appearing in appendix of "An Introduction to
Weather and Climate,” Glenn T . Trewartha,
McGraw-Hill Book C o., Inc., New York, 1943

"T )R O B A B L Y no natural feature of the Eighth
Federal Reserve District bestows more bene­
fits, yet receives more harsh comment than its
climate.
Climate is a basic resource. It was the changes
in the temperature and water content of the air
aeons ago that broke and crumbled rocks into fine
material in which plants began to grow. Further
weathering fused these plant and animal remains
to form soils. And upon these soils, with the help
of present climatic factors, district agriculture, which
still provides the largest share of district income,
depends. Furthermore, the district’s commerce
and industry vary in keeping with the seasonal
changes in climate.
Yet, having seen pastures burned out two years
in succession and watched spring squalls uneasily,
it is not surprising that district residents often fail
to appreciate the long-run view of climate in their
concern wth day-to-day weather. Furthermore, the
appraisal of climate is in many respects a peculiarly
subjective process. T o one individual the continual
rains of the Northwest are depressing drizzles, to
another they are refreshing showers. T o some the
warmth of California and Florida winters is bliss
itself, but others are “ dreaming of a white Christ­
mas.”
Page 26




According to a classification of the world’s
climates, . . .
The classification of climate is a difficult task,
for climate represents an abstract idea. W eather
at a given moment is not climate. Rather, climate
is the generalization of weather occurrences over a
long period of time. But, by studying tempera­
tures and precipitation, prevailing winds, storms and
other weather phenomena and the resultant vege­
tation and soils, meaningful classifications can be
made. Probably the most widely used classification
of the climates of the wT
orld is that developed by
Dr. W ladimir Koppen over a period of nearly 50
years study.
First of all, Koppen forms his classification upon
the basis of five major plant groups of the w o rld :
(1) tropical plants, requiring continuous high tem­
peratures and abundant moisture; (2) desert vege­
tation able to exist with practically no rainfall; (3)
plants requiring considerable heat, but able to stand
short winters and a dry season; (4) plants which
thrive despite short summers and long winters if
the mean annual temperature is above freezing, and
(5) plants of the polar region where average tem­
perature is below freezing. Examples of plants
characteristic of these groups, are: (1) palms, (2)
cactus, (3) oak, (4) spruce, and (5 ) lichen. These

five broad groups are then further subdivided ac­
cording to temperature and precipitation (rainfall
or snowfall) differences. The map (figure 1) shows
in simplified form, the five major climatic regions of
the earth according to Koppen.1

tude rainy climate. The three major subtypes of this
climate are: (1) those with no distinct dry season;
(2) those with a distinctively dry summer and wet
winter— often called the “ Mediterranean climate,”
and (3) those where winter is the dry season.

Upon locating and analyzing the Eighth District
in this climatic scheme, a concept of the district’s
climate with regard to the rest of the world is
gained. Then, its position within its immediate
group can be analyzed, and finally, the variation
within the district itself noted.

Group two, Mediterranean (dry summer), cli­
mates are found only in relatively small region s:
the borderlands of the Mediterranean Sea, central
and coastal southern California, central Chile, the
southern tip of South Africa, and parts of southern
Australia.

. . . the Eighth District is located in the
relatively favorable middle latitude climate of
short winters and long summers, . . .

Group three climates, with winter particularly
dry compared with summer, are characteristic of the
mountainous areas in the tropics of Asia, South
America and Africa, where increased altitude re­
sults in a cooler climate than at sea level in these
latitudes.

The Eighth District is located in the third of
K oppen’s groups— the middle latitude region with
short winters and long summers, sharing certain
broad climatic characteristics with areas in every
continent. The map suggests that the district has
a relatively favorable climate frpm a world-wide
viewpoint. Large areas of the earth are practically
uninhabitable arctic wastes. A third of the earth’s
surface has desert conditions. Another third lies
within the tropics which, although very productive,
also are enervating.
. . . having a generally advantageous rainfall
pattern.
The next step is to see where the district is
located within the broad limits of the middle lati-

W ARM

T EMPERAT E

RAINY

CL I MAT E S

NORTH AMERI CA 8 MEXICO

The Eighth District falls within the first group
above (map, figure 2). This general subtype in­
cludes most of the eastern United States and the
northwest coast of North America, most of western
Europe, a large area of eastern China, the pampas
of Argentina and much of southeastern Australia.
The usual abundance of rainfall and absence of
a pronounced dry season in the district is a great
advantage. H ow critical dry summers can become
has been made only too vivid by the effects of
the drouths here during the past few years. H ow ­
ever, the time of year during which maximum pre­
cipitation occurs may be equally as important as
the total amount of precipitation.
The district features two types of rainfall pat­
terns, termed “ regimes” by climatologists (see fig­
ure 6, page 30), with, of course, many individual
variations. One, known as the “ Ohio” type, has
peak rainfall in the late spring and early summer of
the year. The other, called the “ Tennessee,” has a
single maximum in late winter or early spring and
a well-marked dry spell in mid-autumn. The “ O hio”
type, located in the northern part of the district
and the Ohio river valley area, has much drier
winters than the “ Tennessee” type.

MAJOR SUBTYPES

TE M P ER A TU R E GROUPS

1. no distinct dry season
(1) hot summers
2. dry summers and wet winters
(2) cool summers
3. dry winters
p j g ^ (3) cool short summers
1
The general outline of K oppen’ s system for the five m ajor climate
groups can be more precisely described as follow s: (1 ) Tropical rainy
climates— coolest month 64.4°F. (K op p en ’ s classifications are based on the
centigrade scale, hence the fractional figures in Fahrenheit term s), below
which certain sensitive tropical plants do not thrive; (2 ) D ry climates—
an excess of evaporation over precipitation, includes both desert and
steppes; (3 ) Temperate rainy climates— average temperature of coldest
month below 64.4° F. but above 26.6° F. (32° is often used for North
A m erica). Minimum temperature of coldest month roughly coincides with
equatorward limit of frozen ground and snow cover lasting a month or
m ore; ( 4 ) C old-snow y forest climates— average temperature of coldest
month below 26.6° F. and 50° F. for the warmest month, the latter ap­
proxim ating the poleward limits of forest; (5 ) Polar climates— average
temperature of warmest month below 50°F.




Both of these rainfall regimes are helpful to the
development of major district crops. They bring
rain to crops in the spring, when most needed. And
the Tennessee type provides a dry spell for the
maturing and harvesting of cotton in the fall.
On the negative side in considering the district’s
rainfall is its variability and erosive force in winter.
The latter is particularly severe in the southern
part of the district where the rainfall is heaviest,
reaching 52 inches annually in district Mississippi
Page 27

AVERAGE

ANNUAL
(IN

PRECIPITATION

JANUARY AND

JULY

AVERAGE

TEMPERATURES

INCHES)

JULY
SOURCE: USDA,YEARBOOK
OF A G RICULTURE: 1941

JANUARY
SO U RC E: USDA, YEARBOOK
OF A GRICULTURE: 1941

FIG. 4
FIG. 3

and even 60 inches in Arkansas (figure 3). Further­
more, this area generally has little snow cover in
winter. The drop to less than 23 inches of rainfall
this year from a normal of about 39 inches in the
state of Missouri well illustrates the problem of
variability on a large scale.
Temperature averages throughout the district are
uniformly hot in summer, . . .
Abundant precipitation, however, would be of
little benefit to the district without suitable tem­
peratures. Koppen distinguishes three temperature
groups in the middle latitude rainy climates: (1)
those with hot summers— average temperature of
the warmest month over 71.6°; (2) those with cool
summers— average temperature of the warmest
month under 71.6°, and (3) those with cool short
summers— less than four months over 50°. Both
the New England and northwest coast of the
United States are in the second, cool summer group
as is most of northwestern Europe and southeastern
Australia. The third group is typical of marine
(seacoast or island) location in high latitudes, such
as the northern coast of Norway, where relatively
warm ocean currents temper what would otherwise
be a much colder climate.
As is only too well known by residents, the dis­
trict falls clearly within group one— the hot sum­
mer type (figure 2). It shares this classification
with almost all of the United States south and east
of it and many of the other areas noted previously
in the more general classification.
Page 28




. . . but vary 24 degrees in winter.
From common knowledge of the climate of the
eastern United States, it is obvious that the classi­
fication of the district in group one still obscures
important differences. As the map (figure 4) shows,
while there is little difference in the temperature of
the hottest month from one part of the district to
another, there is a 24 degree variation in the Janu­
ary temperature in northern Missouri compared
with district Mississippi or southern Arkansas. And
the grow ing season varies from 170 days in the
north to 230 days in the south.
Reflecting these factors and others, the
district can be divided into colder and warmer
climatic zones9 . . .
By examining soil, temperature and vegetation
characteristics, we can arrive at some idea of where
a broad transition zone can be drawn between the
colder and warmer climates of the district. A num­
ber of critical lines are shown on the map, figure 5.
In soils, a line can be drawn marking the north­
ward extent of the yellow and red soils, formed
under warm humid conditions. For temperature,
the line showing an average monthly temperature
of 32° can be used. A m ong cultivated crops a sig­
nificant line appears to be that showing the north­
ward limit of cotton. On the basis of these three
indicators, a shaded transition zone is shown on
the map, dividing the climate of the district into
cooler and warmer sections.

DISTRICT

CLIMATIC

ZONES

O f course, any such division is approximate. It
cannot take into account such anomalies as the
cotton crop recently grown in St. Louis county,
nor the fact that southern magnolia trees are appar­
ently flourishing on the campus of Southern Illinois
University. Nor does the use of cultivated crops
as indicators of climate take fully into account the
effect of soils or of plant breeding, improved
methods of cultivation, and so on. Then, too, there
are many local variations in climate, such as the
difference between that of a sunny cornfield com ­
pared to that of a w ooded north-facing hillside, that
are truly significant.
. . . although many of the features are irregular•
The district is so crisscrossed by a pattern of
northwesterly and southwesterly winds that cold
air frequently penetrates far south of its usual pat­
tern and warm air far to the north. As a result the
weather at any particular time may be just the
reverse of the normal climatic pattern. Much of
This irregularity is accounted for by the nature of
the district’s storms. The very word “ storm ” often
conjures up the vision of some sort of disaster.
Actually, most storms of the district instead of
being disastrous are beneficial. They are the source
of rain and snow. Their movements bring the
warm, humid air masses from the Gulf and bracing,
dry air masses from the northern reaches of the
continent. These m ajor storms are technically
known as cyclones— not to be confused with the
word as frequently used in the M iddlewest to refer
mistakenly to tornadoes.




A cyclonic storm consists of two very contrasting
masses of air. It may cover as much as one-third
of the United States. Such storms crossing the
district are formed by the conjunction of a colder,
drier and heavier mass of air (high pressure) from
the north and a milder, more humid air mass (low
pressure) from the south. They move from west to
east at a rate of about 20 miles an hour in summer
and 30 in winter but may become practically sta­
tionary at times. The area of contact between the
two unlike air masses within the storms are known
as “ fronts.” If they are warm fronts (warm air
slowly rising over cold) the long gentle rains so
pleasing to the farmer and gardener may result.
But if they are cold fronts (cold air thrusting itself
under warm air) violent churning of the air results
along the contact surface, often with thunderstorms
or even tornadoes. Follow ing a cold front, the air
is apt to be dry and the skies clear. More humid
conditions follow a warm front. As these storms
succeed one another in rapid, but erratic and often­
times unpredictable fashion, the district experiences
its sudden changes in weather.
In summer, the arctic air masses are relatively
weak, causing these cyclonic storms to migrate
northward with much less influence on the district.
Then the district’s major rainfall is received from
convectional storms identified by the huge masses
of clouds known as thunderheads. These rainbearing cloud masses are formed by the action of
the sun’s rays in drawing water vapor into the air
where it is raised until it finally reaches a condensa­
tion point in the cooler upper atmosphere.
Unfortunately, storms in the district have their
destructive as well as their favorable side. The tor­
nado is the most violent of all storms, albeit gen­
erally infrequent in occurrence and small in area.
Much of the tornado belt of the United States lies
within district boundaries. A series of tornadoes
that hit Arkansas in the spring of 1952 did an esti­
mated $25 million damage and took 129 lives in
that state alone. The sudden squall winds which
accompany severe thunderstorms in the district are
second to tornadoes in their velocities. Hail some­
times adds to the destructiveness of such squalls.
W est Indian hurricanes strike the south Atlantic
and Gulf Coasts and their influence is often felt in
driving rains and strong winds over district states,
but by that time they have lost their violence. In
winter, blizzards and hazardous ice storms are not
uncommon features of district weather.
Page 29

The climates of certain district cities illustrate the
differences between the two zones.
M icroclimates of small areas in the district can
be shown and compared to the general climate by
means of climatic charts for certain district cities.

C U M AT 1C

CHART
G R EE N VIL LE , MISS.

M EM PH IS
(L IT T L E R O C K )*

/

/ S T . LOUIS ( L O U I S V I L L E ) - *

But climatic factors account to a considerable
degree for the kinds of crops grown in the district,
for the dominance of certain crops in various areas,
and for periodic movements in all district econom ic
activity.
Typical seasonal adjustment factors,
reflecting both agriculture and business in the dis­
trict, are illustrated by the chart, figure 7.
The pronounced seasonal variation of business
loans by banks in Memphis is perhaps larger than
that of any other major city in the nation. Out­
standing loans to commerce and industry there
normally skyrocket 75 per cent from the low point
in summer to the peak in December. This unique
performance is primarily because of the financing
of the processing and distribution of cotton. In St.
Louis, business loans by banks fluctuate less, largely
due to a more diversified type of bank lending. In
Louisville, the sudden rise of business loans in the
District Department
Store Sales and Stocks

Business Loans at
Weekly Reporting Bonks

Per Cent

130

ST. LOUIS, MO.

3 9 . 2 IN.

MAXIMUM
MINIMUM

/

10
2
G R E E N V IL LE ,
■

Source:

a

MISS.

mm

51.9 IN.
MAXIMUM
MINIMUM
^

U .S . Dept, of Commerce, Weather Bureau
*. Cities in parens have approximately the same average
monthly temperatures

FIG. 6

Seasonal changes vitally affect agriculture and
business in the district.
Another important feature of the district climate
is seasonal change. All of the district has pro­
nounced seasonal changes, although the springs are
apt to be shorter in the north and the falls drier in
the south, with generally less severe winters. Sum­
mers are uniformly hot, as noted earlier. Seasonal
changes and the highly variable weather that
accompanies the frequent cyclonic storms affect
agriculture and business. These effects are not
the sole cause of the intra-yearly variations in dis­
trict econom ic activity. Customs and institutional
factors as well as other regular influences play a
part in determining the changes which are grouped
under the general title of “ seasonal” movements.
Page 30




FIG.

late fall reflects the financing of the burley tobacco
market. In contrast to the U-shaped curve at city
banks just noted, most rural banks in the district
have a seasonal loan pattern that is the inverse.
Loans rise in the spring and decline in the fall.
This pattern reflects the large volum e of loans to

farmers for the purchase of seed, fertilizer, and
supplies in the planting season and the repayment
after harvest.
Department store sales and stocks as shown by
the chart, also have pronounced seasonal m ove­
ments. Sales rise sharply early in the year as we
purchase lighter clothings for the com ing spring
and summer season. W h o can resist a bargain in
the spring? And in summer, in anticipation of the
first tinge of autumn air, sales begin rising to reach
a peak just before Christmas. O f course, the Easter
and Christmas holiday account for much of this
behavior. But the shift from woolens to cottons
and man-made fibers and back again would not be
necessary without the changing climatic factors.
Stocks, of course, tend to vary in relation to the
sales.
M any other seasonal patterns such as those for
coal output (a drop in summer), lumber produc­
tion (a plateau throughout the warmer months
except for holidays), or food and beverages (a rise
in summer, peaking in early fall) are generally well
known. Their relationship to climatic conditions is
fairly obvious.
Despite recent dramatic weather changes
throughout the world, the district’s basic climate
will probably remain much the same.
During the past tw o years and in some areas
three years, district residents have experienced a
prolonged drouth, which has still not been com ­
pletely broken. This dry spell and other apparent
changes in our weather have led to a concern that
the climate itself is changing. Is the district doomed
to be a desert or a tropics? Or can “ more of the
same” be expected?
W hen climatic change is considered, the perspec­
tive must be lengthened into thousands and even
millions of years. A British authority, Dr. C. E. P.
Brooks, states that great continental glaciations
appear to have occurred at regular intervals of about
250 million years.2 Between these were long periods
of stability and genial climate. The last climatic
episode on a grand scale began perhaps a million
years ago.

which covered at least some northern sections of
the district twenty or thirty thousand years ago.
Another was a change to a warmer climate some
2,000 years ago that probably enabled the Vikings
to sail to Greenland without encountering ice floes.
Then, around 600 B. C. a dramatic change in climate
brought storms and rain to northwest Europe,
while the Mediterranean, with a more favorable
climate, rose as the center of culture. Since the
first half of the Eighteenth Century when instru­
mental observations became available, Europe first
underwent a period of high summer temperatures
and severe winters, and then a period of milder
winters and cooler, rainier summers. The latter
change was so abrupt that in England it was com ­
monly attributed to the fact that the calendar was
altered at this time— 1752. Then, from 1794 to 1810,
there was another change to severe winters for 16
years.
During the last century the climate of both hemi­
spheres has grown warmer, especially since 1900.
Glaciers have been in retreat. The cod fish have
migrated far to the north. And the edge of the
main area of Arctic ice has receded poleward by
some hundreds of miles. But, since 1940 the winters
of Europe have again become severe. The one just
past was the worst in seven years although in the
Eighth District the weather has been exceptionally
warm.
Dr. Brooks, in a recent article, implies that any
forecast as to whether our climate is becom ing
warmer or colder is little better than a guess. He
adds, however, that if there is any truth to the
theory that fuel consumption in the modern indus­
trial age has contributed to the rise in temperature,
a further warming of climate “ would appear to be
slightly the more probable.” 3
Harry F. W ahlgren, m eteorologist in charge of
the St. Louis office of the W eather Bureau, sup­
ports the view of Dr. Brooks that short-term cycles
in climate are difficult, if not impossible, to predict.
He recently said, “ I defy anyone to find a cycle in
the weather records of St. Louis— and these are
some of the oldest in the Midwest, going back 118

However, Dr. Brooks also points out that there
appear to be climatic oscillations of three lesser
orders: (1) those of thousands or tens of thousands
o f years; (2) those of a few hundred years; (3)
those up to a hundred years or so. A m ong those
of the first order is the change to a colder climate
that gave rise to the great continental ice sheets

Since the district is subject to erratic weather
changes, the question arises as to how much, if at
all, man can change the weather to his liking and
needs. Sensational claims have been made in recent

2
Brooks, C. E. P., Climate Through the Ages, McGraw-Hill Book Co.,
New York, 1949.

3 “ What’s Happening to the Weather?”— Harper’s Magazine, January,
1953.




years.”

Page 31

years by rain makers, operating largely in western
states. And hundreds of millions of acres are under
contract for their services. Currently, the citizens
of several south Missouri cities are watching with
interest the attempts of professional rain makers to
bring them relief from the drouth. But the effective­
ness of such methods is a matter of debate among
meteorologists.

Research on weather continues. Congress has
set up a weather modification commission to study
the effects of the use of measures to control the
weather. The College of Agriculture of the Uni­
versity of Missouri has a project outlined for a
long-term study of rain making. Many other official
and unofficial bodies are continuing their research
into weather forces and their modification.

Some experts believe that cloud seeding may
trigger large-scale atmospheric effects. The Amer­
ican Meteorological Society, however, released the
following statement this past June:

On balance, it appears most likely that, even
without success in weather modification, district
residents will continue to experience a relatively
favorable climate for many generations to come.
The present drouth appears to be an erratic occur­
rence and there is no conclusive proof that we have
suddenly shifted to a drier or hotter climate. Never­
theless, it is reassuring to know that scientific
investigations into weather forces are being vigor­
ously pushed.

“Present knowledge of atmospheric processes
offers no basis for the belief that the weather
or climate of a large portion of the nation can
be modified by cloud seeding. The results of
experiments which have been conducted to
explore such large scale effects are considered
to be inconclusive. Not all of the results are
explainable in the light of present knowledge
and further experimentation is desirable.”

H a r r y B. K ir c h e r

ighth CQistnct

MEMBER BANK EARNINGS AND EXPENSES
Net profits of district member banks in 1953
were in record dollar volume but less favorable
percentagewise than in 1952 .
T ^ H E Y E A R 1953 was a profitable one for most
A Eighth District member banks. Net profits,
both before and after taxes, were the highest on
record. However, as a percentage of capital ac­
counts, of total resources and of total earnings, net
profits were less favorable than in the previous
year.i
From the record dollar amount of profits, stock­
holders received the largest amount of cash divi­
dends ever paid, and banks retained a larger amount
of earnings to strengthen their capital positions than
ever before. But the ratio of dividends paid to total
capital was moderately lower than in recent years,
and the proportion of earnings retained was less
than the average of the other postwar years.

These apparent inconsistencies reflect: 1) a more
rapid growth in both capital accounts and assets
than in profits; 2) a rise in expenses at a more rapid
rate, but less in dollar amount, than earnings, and
3) a larger share of earnings going as taxes.

Earnings and Expenses
Eighth District Member Banks
(In Millions of Dollars)
1951
Interest and Discounts on Loans____ . 79.9
Interest on U . S. Gov't. Securities ... . 30.7
Interest on Other Securities..................
7.7
Other Current Operating Earnings... . 18.8

1952
89.6
35.4
8.9
19.5

Total Current Operating Eamings..l37.1

153.4

167.3

Salaries and W a g e s.................. ............... 41.5
Interest on Tim e Deposits.....................
8.4
A ll Other Expenses........... ...................... 31 ?,

45.4
9.8
34.9

48.8
11.9
39.0

Total Current Operating Expenses.. 81.1
Net Current Operating Earnings.... 56.0

90.1
63.3

99.7
67.6

Net Losses and Charge-offs..................
1 Ratios used in this article are from the annual study of operating
ratios made by this Bank. Asset and liability items used in computing the
ratios are averages of items reported in the December 31, 1952, June 30,
1953, and September 30, 1953, reports of condition. Earnings and ex­
pense items cover the calendar year 1953. Ratios are arithmetic averages
of individual ratios of 490 member banks. Ratios computed in this way
may differ in some instances from ratios computed from aggregate dollar
amounts. Copies of the operating ratio report may be obtained from the
Research Department of the Federal Reserve Bank of St. Louis.

Page 32




1953p
97.6
39.6
9.3
20.8

94

9.9

8.0

Net Profits Before Taxes.............. 46.6

53.4

59.6

Taxes on Net Incom e.........................

17 9

22.7

25.0

28.7
Cash Dividends on Common Stock... . 12.6
p Preliminary.

30.7

34.6

12.9

13.6

Net Profits After Taxes................

Earnings rose . . .
Total current earnings of district banks amounted
to $167 million in 1953, up 9 per cent from 1952, the
previous peak. The growth was the result of both
more earning assets and higher average rates of
return on these assets. The expansion in earning
assets reflected an increase in total bank resources
combined with smaller average cash holdings, in
part the result of the reduction in reserve require­
ments last July. Holdings of both loans and securi­
ties rose. The average rate of return on Government
securities was 2.06 per cent, as compared with 1.92
per cent in 1952. This increase more than offset
moderate declines in the average earnings on loans
and other securities.
•. .

but expenses rose more rapidly.

The cost of doing business rose 11 per cent during
1953, compared with the 9 per cent increase in
earnings. However, net current operating earnings
continued to rise from their 1952 peak, as the dollar
rise in expenses ($10 million) was less than the
dollar jump in earnings ($14 million).
The sharpest increase in expenses was in interest
payments on time deposits. The increase was the
result of a substantial growth in time deposits plus
the fact that a large number of banks paid a higher
rate of interest on these accounts. Average interest
payments on time deposits rose from 1.02 per cent
in 1952 to 1.13 per cent in 1953.
Net profits (before taxes) amounted to
$60 million.
Reflecting the greater increase in dollar earnings
than dollar expenses, net current operating earnings
reached an all-time high of about $68 million. After
adjustment for net losses and charge-offs, which
were less than a year ago, net profits (before income
taxes) totaled $60 million or 11 per cent more
than the record of a year earlier.
Income taxes absorbed $25 million . • •
Income taxes, including excess profits taxes, took
a substantial share ($25 million) of the net profits,
$2.3 million more than in 1952. Compared with
total earnings, taxes on net income amounted to
10.9 per cent in 1953, 10.3 per cent in 1952, and 8.7
per cent in 1951. The greater proportion of earn­
ings going for taxes in 1953 than in 1952 reflected,
among other things, an increase in excess profits tax
payments.




Selected Operating Ratios
Eighth District Member Banks
(In Per Cent)
1951
Net Profits (after taxes) to
Capital Accounts ......................... ............
Cash Dividends to Capital Accounts
Net Profits (after taxes) to
Total Assets ...............................................

1952

1953

9.5
3.1

9.6
3.0

9.0
2.9

0.68

0.69

0.66

Expenses to Total Earnings...................... 61.2
Net Losses and Charge-offs to
Total E a rn in g s.......................................... .. 5.0
Income Taxes to Total Earnings........... 8.7
Net Profits to Total Earnings................. 25.1

60.5

61.2

4.5
10.3
24.7

4.8
10.9
23.1

Interest on Government Securities____ .. 1.79
Interest and Dividends on

1.92

2.06

O ther'Securities................ .......................
Earnings on L o a n s ......................................

2.60
5.82

2.57

7.3

7.5

22.9
8.0
22.6
1.02

23.4
8.2
22.7
1.13

2.49
5.64

Capital Accounts to Total Assets........... 7.3
Capital Accounts to Total Assets
less Governments and Cash Assets
22.6
Capital Accounts to Total Deposits
„ 8.0
Time Deposits to Total Deposits........... 22.7
Interest to Time Deposits....................... ... .. 0.98

. • .

5.81

and stockholders received $14 million,

Stockholders received the largest amount of cash
dividends in history, nearly $14 million, about $1
million more than during 1952. The greater amount
of dividends in 1953 continued the steady growth
trend in these payments in the postwar period.
However, reflecting the even sharper growth in bank
capital accounts, the ratio of cash dividends to capi­
tal accounts declined. In 1953 that ratio amounted
to 2.9 per cent, in 1952 it was 3.0 per cent, while
in 1951 it was 3.1 per cent.
leaving $21 million to strengthen bank
capital structures.

. . .

Besides paying a larger dollar amount of divi­
dends, Eighth District member banks enlarged their
capital structures from earnings. In 1953 banks
retained $21 million of profits to add to their capital
accounts, in the previous year they retained less
than $18 million. Largely through retention of
profits, member banks added to their capital struc­
tures at a more rapid rate than total assets, risk
assets, or deposits increased.

N orm an N . B ow sher

Page 33

OF CURRENT CONDITIONS
Resource utilisation declined further
in February . . .

rjU R IN G FEBRUARY, utilization of the re­
sources of the Eighth District declined further.
The labor force was used less intensively as unem­
ployment continued to grow and manufacturing
plants were operated at lower levels than in Janu­
ary. Reduced business activity required fewer funds
from banks. As a result of the newly imposed acre­
age restrictions on cotton, wheat, and tobacco, the
land resources of the district will be shifted to uses
probably requiring less labor and working capital
and perhaps yielding lower net returns. Reflecting
shrinkage in personal incomes and lessened use of
credit, consumer spending dropped more than sea­
sonally in January and remained below year-ago
levels in the first half of February. However, con­
struction activity declined only about the usual
amount from December. In the agricultural sector,
moisture conditions improved and prices of farm
products remained steady.
. . .

as unemployment rose

. • •

Rising unemployment partially measured the
reduced use of the labor resources of the district.
Claims for unemployment insurance in the seven
district states continued to increase during January
and the first week of February. Normally claims
decline after reaching a peak in mid-January. In the
first two weeks of February, claims for unemploy­
ment filed were 130 per cent above a year earlier.
The number of initial claims for unemployment
compensation— notices filed by persons newly out
of work— declined in the five weeks following the
peak week of January 10 at about one-half the rate
in the same period of 1953.

further during January and early February. The
Federal Reserve seasonally adjusted index of in­
dustrial production declined nearly 2 per cent from
December to January and is estimated to have
receded further in February. Steel output changed
little, but automobile production in the first three
weeks of February was somewhat below the Janu­
ary rate.
Industrial output in February was
about 10 per cent below the peak reached in May
and again in July last year. This was almost equal
to the total decline in the 1948-1949 recession.
Steel ingot production in the St. Louis area
dropped to 36 per cent of capacity in the first three
weeks of February after falling to 67 per cent in
the five weeks ending in January. Other plants
were closed reflecting large inventories or lack of
orders. Two zinc smelters were scheduled to close
at the end of February. A railroad car manufactur­
ing plant in Mt. Vernon, Illinois, and a radio tube
plant in Owensboro, Kentucky, closed temporarily.
About 1,300 were laid off at the St. Louis Ordnance
Plant and employment in production of ordnance at
the Indiana Arsenal in the Louisville area was
scheduled to be reduced to 4,200 from a peak of

8,000.
During January, over-all use of industrial electric
power in selected industries of six district areas was
about the same as a year earlier. Normally, some
gain would be expected. A drop might have oc­
curred except for strength in the paper and allied
products and fabricated metals industries. Non­
electrical machinery, electrical machinery, rubber,
and shoe manufacturers all used considerably fewer
kilowatts than in January, 1953.

The ratio of insured unemployment to covered
employment in four district states was higher than
the national average for the week ended January 30.

Despite increased demand owing to cold weather,
coal production in the district dropped 4 per cent
from December to January. Crude oil output re­
mained about the same.

and industrial output declined.
Plant capacity in district and nation was also
used less intensively as industrial output declined

Lumber production remained seasonally low,
with Southern pine output 10 per cent below that of
January, 1953.

. • .

Page 34




Bank lending, too, was reduced, • • •
Declining business activity combined with sea­
sonal factors brought reduced demands for funds at
the district's weekly reporting member banks in the
five weeks ended February 17. M ost types of busi­
nesses, chiefly processors and distributors of agri­
cultural products, sales finance companies and trade
concerns, reduced their outstanding indebtedness.
“ Other,” largely consumer, loans were down sub­
stantially, declining $16 million compared with an
average of $2 million during the comparable five
weeks of the other postwar years. Real estate loans
declined moderately. On balance, these banks sold
securities, both Government and other.
Debits to demand deposit accounts (except inter­
bank and United States Government) were 10 per
cent lower during January than in December at the
22 reporting centers in the district, the same per­
centage decline as reported at the 338 non-financial
centers of the nation. In the district the decline
was much greater than seasonal and was shared
by all but one of the reporting centers.
Early in February the Reserve Banks lowered
their discount rates from 2 per cent to 1^4 per cent
to ease the cost to member banks of obtaining
reserves.
. . .

and farm land may be used less intensively.

A s a result of the recently imposed acreage re­
strictions on cotton, wheat, and tobacco, the land
resources of the district will be shifted to other
uses. W hile the alternative uses of the land ex­
cluded from producing these crops cannot be ascer­
tained at this date, possible uses, such as soybeans,
oats, hay or pasturage, would require less labor and
working capital and would probably yield lower net
returns.
Approxim ately 2,300,000 acres will be diverted
from cotton, winter wheat, and tobacco in district
states during the com ing grow ing season. T obacco
acreage will be reduced by about 9 per cent— ap­
proximately 37,000 acres. Cotton acreage will be
about 16 per cent below last season, a cut of 988,000
acres. Acreage adjustments vary from a 28 per cent
decrease in Tennessee to a nominal acreage increase
in Illinois and Kentucky, states with relatively low
cotton acreage. W inter wheat acreage has been cut
20 per cent from 1953 seedings, or approximately
1,289,000 acres, in district states.
Consumer spending dropped more than
seasonally.
Retail sales in the nation declined slightly more
than seasonally from December to January, and
were 3 per cent below the very high levels of a
year earlier. Autom obile sales were 12 per cent




less than a year earlier.
In the district, adjusted department store sales
declined from Decem ber to January and were 7
per cent off from the record second-quarter 1953
level. There were indications that price promotions
on existing inventory had run their course by midJanuary. Traditional “ white g ood s” sales results
were a little below expectations in some stores.
Through the three weeks ended February 20, pre­
liminary data indicated that district department
store sales were about 2 per cent below those a year
ago. Store traffic was light although home-furnishings and housewares promotions in the period were
termed satisfactory.
Furniture store sales in the district during Janu­
ary were substantially lower than in December and
were 11 per cent lower than in January, 1953.
Inventories, reductions of which have been
blamed for much of the recent drop in manufactur­
ing output, were lower than a year earlier at most
retail lines in the district at the close of January.
However, construction activity declined only
about the usual amount from December •
District construction activity in January as indi­
cated by employment was less than a year earlier
but continued at about the December level after
allowance for seasonal factors. M ost of the reduc­
tion has been at the A E C project near Paducah,
Kentucky, but construction employment was also
substantially less in Arkansas and Louisville where
major defense plant projects were completed during
1953.
Moisture conditions improved and prices of
farm products remained steady.
Near normal precipitation fell in the major por­
tion of the district during the nine-week period
ending February 15; however, a large part of Mis­
souri still suffers from lack of moisture. The imme­
diate problem in much of the drouth area is water
for livestock consumption, home use, and city
requirements. Despite the drouth, fall-sown wheat
has wintered fairly well. During the dormant sea­
son moisture requirements are relatively small, thus
the moisture shortage in some areas during this
winter has merely slowed growth or replacement
of top growth where the crop has been grazed.
Following an agricultural price upturn in D ecem ­
ber and January, mid-February average prices
received by United States farmers leveled off show­
ing little change from the month previous. M ajor
district livestock and livestock product prices eased
downward two to ten per cent while crop prices
were generally steady to 5 per cent higher as free
supplies of wheat, cotton, and soybeans tightened.
Page 35

The
DISTRICT
RECORD

V A R IO U S IN D IC A T O R S O F IN D U S T R IA L ACTIVITY
Jan., 1954

Percent Change*
D ec., 1953
Jan., 1953

Industrial Use of Electric Power (thousands of K W H per working day, selected
industrial firms in 6 district citie s).......................................................................................
12,622
Steel Ingot Rate, St. Louis area (O perating rate, per cent of ca p a city )............................. 67
Coal Production Index— 8th Dist. (Seasonally adjusted, 1 9 3 5 -1 9 3 9 = 1 0 0 )..............
137p
Crude Oil Production— 8th Dist. (D aily average in thousands of b b ls .).....................
310.2
Freight Interchanges at RRs— St. Louis. (Thousands of cars— 25 railroads—
Terminal R .R . A ss n .).................................................................................................................
105.7
Livestock Slaughter— St. Louis area.
(Thousands of head— weekly average—
102.0
first 4 w eeks)................................................................................................. ................................
Lumber Production— S. Pine. (A verage weekly production— thousands of bd. ft.)..
173.6
Lumber Production— S. Hardwoods. (O perating rate, per cent of ca p a city )............
88

-0 — 16
— 5
— 1

+ 1
— 31
+ 3
+ 2

+ 5

— 3

— 4
+ 2
-0 -

— 14
— 10
—0 —

*
Percentage change figures for the steel ingot rate, Southern hardwood rate, and the coal production index, show
the relative per cent change in production, not the drop in actual percentage and index points,
p Preliminary.

CASH

BANK D EBITS1
Jan.,
1954
(I n
m illions)

1

Percent
Change from
Jan.,
D ec.,
19532
1953

Six Largest C enters:
East St. L o u is -N a ­
tional Stock Yards,
111...................................... £ 125.6
Evansville, In d ...............
155.9
Little R ock, A rk ............
160.4
Louisville, K y .................
702.2
Memphis, T enn...............
690.2
St. Louis, M o ..................
1,992.3
Total— Six Largest
Centers.........................
1,826.6
Other Reporting
C enters:
Alton, 111...........................
35.9
14.3
Cape Girardeau, M o ......
27.7
El D orado, A rk ...............
46.8
Fort Smith, A rk .............
28.2
Greenville, M iss.............
9.4
Hannibal, M o ..................
8.8
Helena, A rk .....................
Jackson, Tenn................
21.6
68.6
Jefferson City, M o .........
41.6
Ow ensboro, K y ...............
Paducah, K y ....................
35.5
Pine Bluff, A rk ...............
37.9
33.3
Quincy, 111.......................
12.1
Sedalia, M o ......................
Springfield, M o ...............
68.8
Texarkana, Ark..
19.9
Total— Other
Centers......................... $ 510.4
T otal— 22 Centers....... $4,337.0
T otal— Seasonally A d ­
justed (1 9 4 7 -4 9 = 1 0 0 )

Arkansas

- 9
-

2

-12
- 7

-12
—W
5%
8

—1
4
—1

—
8
— 3

—1
5
—

8

+ 32
—

6

—1
1
—1
9
—1
1
—1
1
—4
—

2

— 4%
— 10%

— 7

+1
—
1
— 4
+1
—

8

— 7
—

6

—5
—1
5
—
1
— 39
—1
5
—2
1
— 4
—

6

+

7

+ 5
+ 1

— 12%
— 2%

St. L ou is.......
Louisville Ar<
Louisville..

136.5%

— 8%

— 2%

FU R N ITU R E

(1947-1949-- 100)
Unadjusted

Awarded 8th F. R. Dist.
D e c.,*53
143.5p
134.7p
147.5p

N o v .,*53 D e c.,*52
196.9
145.6
T otal....................
Residential..........
169.7
161.7
A ll O ther...........
209.4
138.2
Seasonally adjusted
229.6
188.2
T otal..................... 186. Op
199.6
Residential.......... 168.4p
202.1
A ll O ther............ 194.1p
243.5
181.8
* Based on three-month m oving average of
value of awards, as reported by F. W . D odge
Corporation,
p Preliminary.

A S S E T S A N D LIA B IL IT IE S O F EIGH TH

D ISTR IC T M EM BE R B A N K S

( I n M illions of D ollars)
W eekly R eporting Banks
Change from
Jan. 13, 1954
Assets
Feb. 17, 1954
$— 19
Loans (N e t)1................ .............................
$1,383
—
12
Business and A gricultural...................
741
+
3
Security............. ......................................
33
—
1
Real Estate..............................................
255
B anks........................................................
31
+
7
Other (largely con sum er)...................
341
— 16
— 44
U. S Government Securities..................
1,029
Other Securities.............. ..........................
189
—
9
38
Other Assets........................................
*^ 1 \ CCofC
1
1 CA
(L
$ 10
—1

_______ A ll M ember Banks
Change from
D ec. 30, 1953
Jan. 27, 1954
$ — 45
$2,148

+

2,051
417
1,465
58
$6,139

—

11

4

— 111
- 0 $ — 149

Net Sales
Jan., 1954
compared with
D ec.,’ 53 Jan.,’ 53
.. — 47%
— 8%
. — 47
— 1
. — 47
— 9
. — 48
— 11
. — 38
— 20
. — 60
— 22
. — 42
— 10

Inventories
Jan., 1954
compared with
D e c .,’ 53 Jan.,’ 53
-0 -%
— 3%
— 1
+ 1
+ 4
+ 5
+ 4
+ 5
*
*
*
*
— 6
— 2

PE R C E N T A G E D IS T R IB U T IO N O F SALES
Jan.,’ 54
15%
85

100 %

D e c.,*53
17%
83

100 %

$ — 39
81
$ 797
Demand Deposits of B anks............ .......
$ 725
$— 48
— 119
Other Demand Deposits..
2,007
3,750
Time Deposits............... .....................
519
1,106
+ 8
+ 6
Borrowings and Other Liabilities..
59
+ 8
69
+ 2
Total Capital A ccou n ts.....................
236
417
-j- 3
+ 1
Total Liabilities and Capital..............
$3,546
$
—110
$6,139
$ — 149
1 Loan breakdowns reported gross for weekly reporting banks, not available for all m ember banks.

Percentage of A ccts.
and Notes R eceiv­
able, Outstanding
N et Sales
Stock
Stocks
Jan. 1, 1954, co l­
Turnover
lected during Jan.
on H and
12 mos.
Excl.
Jan. 1 to
Jan., 1954
1953
Jan .31/54
compared with
to same com p, with
Jan. 31,
Instal. Instalment
1953 A ccoun ts Accounts
D e c.,’ 53 Jan.,’ 53 period *52 Jan. 31, ’ 53 1954

DEPARTMENT STOR ES

STORES

* N ot shown separately due to insufficient coverage,
but included in Eighth District totals.
1 In addition to follow ing citie s includes stores in
Blytheville, Fort Smith and Pine Bluff, A rkansas; H op ­
kinsville, Ow ensboro, K en tu ck y ; Greenwood, Missis­
sippi ; and Evansville, Indiana.
2 Includes Louisville, K en tu ck y; and N ew Albany,
Indiana.

Cash Sales
Credit Sales
T otal Sales

K entucky....... 133,320
Mississippi.. .. 60,084
M issouri.... .. 87,636
Tennessee.... .. 54,052
7 States...... ..$655,969
8th D ist...... ,..$313,568

IN D E X O F C O N S T R U C T I O N
CONTRACTS

Liabilities and Capital

1 Debits to demand deposit accounts of individuals,
partnerships and corporations and states and political
subdivisions.
2 Estimated.

RETAIL

Dec.,
1953
..$ 44,482
. 177,540

IN C O M E

Percentage Change
Jan. thru D e c.,'53
compared
with like period
Dec.,
1952
1952
1951
— 8% — 5% — 1%
+ 4
— 4
— 5
— 1
+ 9
— 3
— 4
— 11
— 12
+ 18
+ 20
+ 20
- 0— 6
— 13
— 6
— 6
— 15
— 1% — 2% — 5%
— 11% — 9% — 7%

1%

+ 113
—1
0
—

FARM

(In thousand
of dollars)

Jan.,’ 53
19%
81

100 %

8th F. R .
District T otal........... ....
Fort Smith Area, A rk .1...
Little R ock Area, Ark ....
Paducah, K y ................. ....
Quincy, 111.................. ....
Evansville Area, Ind.......
Louisville Area,
Ky., In d .........................
St. Louis Area,
M o., Ill...................... ....
Springfield Area, M o.. ....
Memphis Area, Tenn.. ....
A ll Other Cities2..............

INDEXES

— 56%
— 65
— 60
— 62
— 58
— 26

— 5%
— 9
— 2
— 35
-4- 3
— 13

n.a.
+ 3%
n.a.
n.a.
n.a.
n.a.

n.a.
27%
25
n.a.
25
n.a.

17%
n.a.
12
n.a.
17
n.a.

— 65

— 6

— 9

27

26

18

— 51
— 63
— 59

— 2
— 14

— 6
— 19

n.a.
21
29
n.a.

n.a.
22
30
18

19
n.a.
16

— 68

n.a.
— 4
— 3
n.a.

OF

SALES

AND

Sales (daily average), unadjusted4..
Sales (daily average), seasonally adjusted4................

Stocks. unadjusted5

n.a.
23%
n.a.
n.a.
n.a.
n.a.

STOCKS - 8 T H
Jan.,
1954
83
108
99
117

8

47%
42
40
n.a.
59
n.a.
44
54
n.a.
39
41

DISTRICT
D ec.,
1953
185
113
104
118

N ov.,
1953
136
114
132
121

Stocks, seasonally adjusted5.............
4 Daily average 1947-49=100.
5 End of M onth average 1947*49=100.
Trading d ays: January, 1954— 25 ; December, 1953—-2 6; January, 1953— 26.

Jan.,
1953
83
108
105
125

1
In order to permit publication of figures for this city (or area), a special
2
Fayetteville, Pine Bluff, A rkansas; H arrisburg, Mt. V ernon, Illin ois;
sample has been constructed which is not confined exclusively to department
Vincennes, In d ia n a ; Danville, Hopkinsville, Mayfield, O w ensboro, K en ­
stores. Figures for any such nondepartment stores, however, are not used in
t u c k y ; Chillicothe, M issouri; Greenville, M ississippi; and Jackson, Tenn.
com puting the district percentage changes or in com puting department store
Outstanding orders or reporting stores at the end of January, 1954, were
indexes.
17 per cent smaller than on the corresponding dat* a year ago.