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Monthly Review A Volume X X X N M A Y 1, 1948 K L O U Number 5 The Potential Demand for Wood in the Eighth District Throughout the Eighth District, civic, business and agricultural leaders with the aid of govern mental bodies and private organizations are at tempting to devise means of attaining a better balance between the agricultural and industrial components of their local economies. Common to almost all programs, whether advanced at the regional, state or local level, is a plan for encourag ing the expansion of manufacturing industries. The addition of new manufacturing plants as such, regardless of their relationship to the dis trict’s resources, represents a desirable objective in long-range community plans. It would, however, seem even more desirable and economically sound to develop new industries that are intimately related to the natural resources at hand. The forests of the Eighth District are among the major resources with which nature has endowed the people of this region. These timber stands constitute the major source of raw material supply for a large number of manufacturing plants now in the district. The location of these plants was deter mined largely by the availability of an adequate supply of timber. The present wood-processing and converting in dustries are important to the region’s economy. Are there possibilities for expanding or building upon the present industry in the future? And if such expansion is indicated to be possible, would it be desirable in terms of the regional economy as a whole? An answer to these questions, from the point of view of the district as a whole and of individual This article attempts to appraise current and poten tial demand for wood in the Eighth District and con sider that demand against current and potential sup ply. It is a further development of the story begun in the December, 1947 Review, “The Forest Resources of the Eighth District,” and continued in the March, 1948 issue, “Wood Processing Industries in the Eighth District.” The major points developed in those articles were: 1. The Eighth District proper contains 54 million acres of forest land—43 per cent of the district’s total land area. In the full seven district states, forest land area totals 86 million acres with sawtimber volume estimated at 112 billion board feet. 2. Much of this forest land <37 per cent) is seedling, sapling, poorly-stocked, or denuded. Other (20 per cent) is in pole timber. Only 43 per cent is classed as sawtimber stands. Two-thirds of this is hardwood and past cutting practices have resulted in large quantities of low-quality hardwoods. 3. Current growth of all timber just about balances current drain from all sources, but sawtimber growth is substantially (about one-third) less than drain. 4. Case studies indicate that good forestry manage ment practices can triple growth rates. 5. The district has a substantial wood-processing industry in existence. It is, however, heavily weighted on the timber basic industry side where value of out put per worker is smaller than in other wood-processing industries. 6. Expansion of the district’s wood-using industry could take place by (a) growing on the present pattern, (b) expanding through new industries, (c) shifting emphasis from basic to finished lumber production. communities within the district, depends upon a number of factors. It is obvious that capital and labor are prerequisites. It is evident, too, that any specific expansion should be preceded by a careful analysis of the present and potential market for the particular products to be manufactured. In addition to these considerations, however, are the raw mate rial requirements, which essentially are for timber. Thus the feasibility of an increase in manufacturing activity dependent upon the forests for raw materials, becomes a problem of improving that raw material and relating its supply to potential demand.1 COMM ODITY DRAIN AND TIM BER GROW TH In 1944, about 2.6 billion cubic feet of timber were taken from the forests of the seven district states for use or were lost by destruction. Just what these 2.6 billion cubic feet of timber were used for, no one knows precisely. An indication of the general purposes for which timber was cut in three states in 1944 can be obtained from figures covering drain by commodities in Arkansas, Missis sippi, and Tennessee and shown in Table I. The total drain in these three states represented 67 per cent of total drain in all district states and sawtimber drain was equal to about 80 per cent of that in seven states. The pattern of use in these states probably is not precisely representative of the seven-state area or of the Eighth District alone since variations in the four remaining states might change the relative importance of the amounts cut for some of the minor uses. However, in general, the pattern shown in the table is fairly representa tive of both the district states and the Eighth Dis trict proper. The estimates of drain, by commodities, in Arkansas, Mississippi, and Tennessee do not pur port to measure the amount of wood consumed in these three states. Neither are the estimates of drain referred to earlier for the district states to be regarded as measures of wood consumption in the seven states. A large part of the lumber sawed in Arkansas, Mississippi, and Tennessee probably was shipped to other district states or to points outside this region. From 1940 to 1943, direct ship ments from these three states to markets outside the district states averaged 1.3 billion board feet annually. Thus, in any given area, the amount of timber cut for commodities is not to be construed as equivalent to wood requirements in that area. 1 Lum ber statistics are at best confusing for they are reported in terms o f cubic feet, board feet, cords, posts, etc., and conversion from one to another measure is difficult. They also are reported in terms of total timber and sawtimber. C ubic feet is a fairly com m on denom inator and total timber usually is expressed in cubic feet. Sawtijnber is expressed in board feet, poles in cords, etc. Difficulties in converting from one measure to another, stem from many factors. F or example, a cord is a stack of w ood measuring 4 feet by 4 feet by 8 feet. A cord of small stock has m ore cubic feet o f wood than a cord of large stock simply because the pieces fit m ore closely together. A lso, cubic feet on the stump processes into less cubic feet because o f m anufacturing loss. For rough conversion factors 1,055 board feet of sawtimber are equiva lent to about 204 cubic feet; a cord of fuel w ood to about 68 cubic feet; and a cord o f pulpwood to about 83 cubic feet. Page 58 TABLE I T IM B E R REM OVED FROM C O M M E R C IA L FORESTS OF A R K A N S A S , M I S S I S S I P P I A N D T E N N E S S E E B Y C U T T IN G A N D D E S T R U C T I V E A G E N C I E S I N 1 94 4 1 A ll Tim ber 2 Sawtimber 3 Pole-sized Trees 4 (000,000 cu. ft.) (000,000 bd. ft.) (000 cords) T otal cut for Commodities 1,621 6,604 3,604 809 4,024 ............................. Lum ber ................................ Fuelwood ............................ 310 790 2,057 Pulpwood ............................ 118 351 617 * Cross ties ............................ 109 496 22 Fence posts ....................... 24 59 168 Veneer ................................ 58 258 6 Cooperage ............................ 66 280 9 Other .................................... 124 343 704 L ost by Destructive A gencies 156 307 1,464 1 Com m odity drain for 1944 preliminary and subject to revision; drain by destructive agencies estimated average per 10-year period 1934-1943. 2 Drain from all trees 5" diameter at breast height and larger, bark not included. 3 Drain (lum ber-tally basis) from sawtimber trees; pines 9" d.b.h. and larger; hardwoods and cypress 13" d.b.h. and larger. 4 Drain from trees below sawtimber size and not smaller than 5" d.b.h. bark included. S ource: Reappraisal P roject, Southern F orest Experim ent Station. It also is difficult to arrive at a satisfactory esti mate of the total amount of wood actually required in the district or in the district states for construc tion, industrial uses (that processed into finished wood products or converted into pulp, chemicals, etc.), fuelwood, and the like. Essential basic data are lacking for statewide as well as county esti mates. U. S. Forest Service estimates of wood requirements of the secondary wood processing plants in the district states in 1940 totaled 2.3 bil lion board feet of sawtimber including lumber, veneer, and logs and bolts.2 If demand for con struction, fuelwood, and all other requirements were included, total wood requirements probably were between 8 and 9 billion board feet, and in 1947 amounted to perhaps as much as 10 billion board feet.3 Thus it appears that in the district states, under present management practices and with demand at even the estimated 1940 level, total annual require ments of sawtimber exceed annual growth. The above also suggests that for the district states, total demand, under present conditions, can be met only at the expense of our timber land— by “ mining” or over-cutting our timber— and by importing from other parts of the country. District States vs. Eighth District— While annual timber growth in the district states is less than the amount required e.ach year for all uses in these states, timber growth in the Eighth District proper apparently is equal to or is in excess of present con sumption requirements. From 1940-43, the seven states combined imported an average of 2.2 billion board feet of lumber, or 2 Lum ber used in m anufacture 1940. 3 Estimated on the basis o f available data and by adapting techniques indicated in the U . S. Forest Service report on “ Potential Requirements for Tim ber P roducts in the U nited States.” Includes plants, except sawmills, w hose major products are manufactured from wood. SOURCE: Compiled from most recently published industrial directories for the district states. 830 million board feet more than was exported. But nearly 65 per cent of the imported lumber was shipped into Illinois and Indiana and processed largely in portions of these states outside the Eighth District. On the other hand, almost 45 per cent of the lumber shipped outside the district states originated in Arkansas, which is entirely within the Eighth District. An additional 37 per cent of the lumber exported originated in Missis sippi where one-third of the forest land and 30 per cent of the state’s lumber production is in the Eighth District. This would suggest that sub stantial amounts of lumber cut from sawtimber trees are available in the district proper and might be further processed here into finished goods. PO TE N T IA L SUPPLY AND CONSUMPTION An attempt to build up Eighth District industry by curtailing shipments of district raw materials to out-of-district plants is rather narrow region alism, however. Basically this type of regional expansion is desirable only if it can stand on its own feet— that is, if economic factors indicate that existing industry should shift here. It would be better to expand district industry on the basis of expanding raw materials supply and expanding markets. Applications of better forest management prac tices could increase timber growth sufficiently to take care of current wood requirements without Page 59 depleting our resources and also to take care of potential expansion of wood using industry. The large volume of low quality hardwoods and pole-sized trees in the district also represents a source of supply for processing plants capable of utilizing timber of this size and quality. The pole sized trees recommended for harvesting would be those commonly pulped and not those which, if left to maturity, ultimately would provide more valuable products. Such plants might include those manufac turing wood specialty products; they might also in clude wood pulp mills. New products, some of which are discussed later, also might be manufactured from this type and quality of timber. It should be noted, too, that there is ample room for increasing the value of production, even under present conditions of growth and drain, by improv ing the quality of goods now being manufactured. Higher quality lumber, or better furniture, for ex ample, would mean larger income. Obviously all 86 million acres of timber in the district states or the 53 million acres in the district proper will not be transformed overnight into properly managed timber. However, the trend in that direction is developing in some parts of the area and if con tinued, would ultimately result in a large increase in growth. A slow-down period in production, how ever, may be essential to effecting a successful con version in order to allow the building up of stock or timber capital to a point where the growth or interest can approach its potential. If the minimum potential sawtimber growth per acre (that was indicated in an earlier article to be possible) were realized on the present commercial forest acreage in the district states, annual saw timber growth could be increased from the current 6.2 billion board feet to more than 16 billion board feet.* At that rate, annual growth would be almost double the estimated total consumption require ments of wood in the district states in 1940 and would support a total commodity cut nearly twice as large as in 1944. If achieved in the three states whose commodity drain is shown in Table I, sawtimber growth would be increased from 4.6 billion board feet to more than 12 billion board feet per year. Under such conditions, the emphasis in develop ing new wood-using industries would be consider ably different than under present growth condi tions. At present the supply situation is more con ducive to the establishment of many small plants 4 See table in M onthly R eview , December* potential grow th per acre for district states. Page 60 1947, for estimates of than large industries. An increase in acreage put under proper management would increase the prac ticability, if not the necessity, of developing indus tries with large raw material requirements. TRENDS IN W O O D CONSUMPTION BY EXISTIN G INDUSTRY The future expansion of wood consumption will be contingent not only upon the supply of timber; other long-term trends will become increasingly important. Some of these can be considered pri marily in terms of their effect on total timber drain while other developments are essentially problems influencing the industrial demand for wood. The major expansion possibilities appear to be in the increased use of veneer, pulpwood and lumber, including in the latter the finished wood products industries. Lumber— In the manufacture of lumber there appear to be greater income-producing opportuni ties in the improvement of quality than in the devel opment of new lumber manufacturing plants. In 1942 there were at least 6,800 operating sawmills in the district counties— an average of 18 mills per county and equivalent to more than one out of every six sawmills in the United States. The pres ent number of mills in the entire district is not known, but the total in Arkansas and the district portions of Mississippi and Tennessee in 1946 was 6 per cent larger than in 1942, according to the Bureau of the Census. The number of plants in the Mississippi counties declined from 1,217 in 1942 to 981 in 1946, but in Arkansas they increased from 1,439 to 1,736, and in the Tennessee counties the number rose from 382 to 528. Lumber produc tion in Arkansas and in the district portion of Mis sissippi was smaller in 1946 than in 1942 but was larger in the Tennessee counties. Data showing the trend in the remainder of the district proper are not available, but combined output in those four states (Illinois, Indiana, Kentucky, and Missouri) was 48 per cent larger than in 1942. Total U. S. production was less than 1 per cent larger than in 1942. At the present time lumber manufactured in this district ends up in an amazing assortment of places and products. It goes underground in mines and it sails the seven seas. It is used to build new houses and factories and to patch up old ones. Baseball fans sit on it in Yankee Stadium and it helps get base hits for the St. Louis Cardinals. In the form of crates it carries Arkansas’ strawberries to market and as cooperage it helps age Kentucky’s whiskey. It is treated with preservatives and used for rail road ties and telephone poles. Acetic acid and acetone are made from it and as wood flour it goes into linoleum and explosives. In infancy children play with toys made from the district’s lumber and, having lived their lives, may be buried in caskets manufactured in the region. H ow much more lumber, produced in the district, could be processed into finished goods in the dis trict is contingent upon a number of factors. One consideration is the increased competition from other materials. The U. S. Forest Service has classified finished wood products into two general groups, based on the extent to which wood as a major raw material has been displaced by other materials. W ood con tinues to be favored in the production of furniture, handles, matches, toys, caskets, sporting goods, radio cabinets, patterns, and similar items which in total account for 80 per cent of the lumber used in the manufactured wood products industries. The second group includes items in which wood has been replaced to a large extent by metals and other materials. These are refrigerators, motor vehicles, trunks, agricultural equipment, cigar boxes, and the like, which account for the remaining 20 per cent of the lumber used in finished wood products. Obviously, the competitive position of wood as a raw material is significant and plans for the de velopment of new industries must take it into account. However, in the district proper even those industries in the first group above are rela tively underdeveloped in terms of timber supply and the volume of lumber produced in the district. Lumber requirements of manufactured wood products plants vary considerably, depending on the scale and type of operation. As a community industrial development, a plant which provides a large market for local timber is more attrac tive than a small plant. But where timber and lumber are available and are not being utilized to the fullest advantage, even the possibilities of a small processing plant should not be overlooked. For example, a small plant employing only two or three men in the manufacture of 500 screen doors and 5,000 window sash per year would pro vide a market for upwards of 30,000 board feet of lumber per year.5 At the present average rate of sawtimber growth in the district states, a plant of even this size could absorb the annual growth from 8 W o o d requirements and em ploym ent figures used in this section were furnished b y the F orest E conom ics Section o f T V A and are based on a survey of w ood-u sing industries in the Tennessee V alley R egion in 1946. E ach is an average based on four or m ore establishments. 400 acres of sawtimber or from eight or more aver age farm woodlots. A plant manufacturing handle blanks at the rate of 150,000 blanks annually would require the aver age annual growth from 3,000 acres of sawtimber in the district states, or all the sawtimber growth from upwards of sixty farm woodlots. The economic effects of a larger scale operation would be spread over a wider area. A furniture manufacturing plant employing 160 workers and with an annual production of 13,000 bedroom suites and 50,000 upholstered chairs would require about 2 million board feet of lumber. At the present average rate of sawtimber growth, 27,000 acres of sawtimber could be utilized to supply this factory with lumber. In Mississippi, where average growth is the most rapid of the district states, it would re quire only 17,000 acres but in Missouri, where aver age sawtimber growth per acre is lowest, it would take the annual growth from 95,000 acres. For the district states as a whole, the sawtimber on perhaps 500- farm woodlots could be cropped each year to meet the wood requirements of a plant this size. All of these illustrations are based on averages which, except by chance, would not be applicable to any specific community. In some localities, for example, the broad economic effects of a furniture plant of this size would be spread over a much smaller area than in other communities. But while they are not universal in their application, these examples indicate the extent to which the income of an entire community, including that of farm woodlot owners, could be affected by an industrial development based on timber resources. Veneer—Veneer is wood that is cut into sheets. These may be used singly, as in the manufacture of baskets and boxes, or glued to other pieces of wood to form an exterior surface, as in the case of furniture. When glued together in several thick nesses, it becomes plywood, a material that has a wide variety of uses industrially and in construc tion. Nationally, production of plywood is centered on the W est Coast. A number of mills are located in the district states but the supply of logs suitable for the production of veneer is not large relative to demand. However, the industry might be devel oped in this area as the quality of lumber improves with better management practices. Pulp— The location of a paper pulp mill is deter mined primarily by the availability of an adequate supply of pulpwood and water. In this district there is a large supply of pulpwood, and in recent Page 61 years several pulping plants have been established. However, the present timber stand, particularly in Arkansas, is believed to be capable of supporting a sizable addition to current capacity. This possi bility is enhanced by the development of a new technique in paper making which the National Bureau of Standards estimates may increase by as much as 75 per cent the amount of hardwoods used in the manufacture of wood pulp. In view of the relatively large supply of pulp-sized hardwoods in this region, the commercial application of this proc ess may prove beneficial to this district. As a community industrial development project, a wood pulp mill has one major disadvantage—the large capital requirements for a modern mill. Few if any communities in the pulpwood areas of the district could promote a pulp mill in the way other types of wood-using industries could be sponsored. However, local groups in such areas might well call attention of the industry to their natural resource advantages. The importance of a pulp mill, in terms of wood consumption, is evidenced by the fact that the average sulphate mill in the South requires upwards of 180,000 cords of pulpwood per year. Other Lines— Some of the present sources of tim ber drain listed in Table I, which involve little or no manufacturing, appear to be faced with a long term declining trend. Fuel wood, the second largest source of demand for timber in the district, may be one such case. On a national basis the consumption of fuel wood decreased steadily from 1941 through 1945. This decline is attributed by the U. S. Forest Service to a scarcity of labor for woodcutting and to the migration of farm population from agriculture into other industries.6 But other data (which may be imperfect) point to a long term declining trend. Future demand probably will be reduced by in creased competition from other fuels, such as butane gas, and by the further extension of electric power lines into rural areas. A decline in fuel wood consumption would be more important in terms of timber drain than in its effect upon industrial activity since little if any processing in the accepted sense of the word is involved in the production of fuel wood. Also, the effect on the timber stand would be gradual and probably not apparent in any one year. Similarly, the amount of wood taken from the forests for fence posts probably will show little if any significant increase above present levels. Com 6 “ Potential Requirements for Tim ber Products in the U nited States,” U . S. Forest Service. Page 62 petition from steel plus a greater use of treated posts probably will hold consumption to approxi mately the present amount. As in the case of fuel wood, the effect in terms of industrial activity would be negligible since most fence posts are cut by woodlot owners and used primarily on the farm from which they were cut. The remaining commodity classifications shown in the table involve varying degrees of manufacturing or processing. The outlook for some of the indus tries represented, as indicated by present trends, suggests that at best the future level of consump tion will be only slightly higher than at present and possibly may be below present levels. One of these is the cooperage industry. Nation ally, wood consumption in the cooperage industry declined steadily during the thirty years prior to 1939. In 1939 it was 64 per cent less than in 1909 and 50 per cent smaller than in 1929. Although requirements increased in the late 1930’s, in part as a result of the repeal of prohibition, the industry used considerably less wood at the peak of the 1930’s than in previous years. Competition from paperboard and other materials has been and is an important reason for a slackening in the produc tion of the cooperage industry. Present develop ments in the container field indicate increasing competition can be expected. Most of the com petitive products, of course, use wood as a raw material, so that the decline of the cooperage in dustry does not necessarily imply an absolute de crease in demand for wood. The cross tie industry is in the peculiar position of constricting its market as it improves the quality of its output. Development of wood preservative processes has lengthened the average life of a cross tie, properly laid, to 25 to 30 years as compared with 6 to 10 years for untreated ties. In 1943 about 17 per cent of the cross ties on Class I railroads were untreated and the replacement of these ties constitutes a sizable future market. From 19291943, annual replacement averaged 129 ties per mile and in 1942 it was 148 per mile. The replace ment rate is expected to decline to about 135 per mile in the near future and eventually to about 120 per mile as the number of treated ties in use increases.7 Since the demand for ties is determined largely by the mileage of track operated, which is not likely to increase substantially, and by the average life of treated ties, the future timber drain from this source is not likely to increase appreci ably. 7 “ Potential Requirements for Tim ber Products in the U nited States,” U . S. Forest Service. NEW USES FOR W O O D Throughout the preceding discussion little atten tion has been devoted to important new uses for wood and for wood waste that have been developed in recent years. Many of the products of the labora tories have been demonstrated to be physically or chemically feasible. However, in more cases than not, costs have yet to be lowered to a point where production can be undertaken on a profitable basis. Also, a number of these products admittedly have limited uses. Many are special-purpose products with a restricted market under present conditions. Still they offer possibilities for future demand. Among the new materials are such products as impreg, a laminated wood product that has been impregnated with resin-forming chemicals, dried and cured. It resembles natural wood, is much harder and has a higher degree of moisture resist ance than natural wood. It is believed to have commercial application in window frames, doors and interior wall panels. By replacing the curing treatment in the process with hot pressing at vary ing pressures, a product called compreg is pro duced. During the war this material was used for airplane propellors and other aircraft parts and it ' is thought to have potential uses in furniture. However, production costs are high. Considerable progress has been made in the de velopment of products made from wood wastes, which are potentially the basis for a number of new industries. The U. S. Forest Service has esti mated that a total of 89 million tons of wood waste a year results from normal operations of logging camps, sawmills, planing mills, millwork plants, and the like. Not all this waste would be available for converting into other products but a consider able amount could and probably would be collected for utilization if outlets for the waste were avail able. In the case of the average furniture plant discussed above, about 35 per cent of the annual wood requirements result in waste. One-half of the waste in this plant is burned, one-fourth is sold and one-fourth remains unused. About 25 per cent of the wood bought by the handle blank factory ends up as waste but in this case utilization is higher— 50 per cent being burned and the remainder sold. W ood wastes can be converted into a number of products. For example, one ton of dry sawdust can be converted into 1,100 pounds of high protein stockfeed. White pine sawdust and shavings are ground into wood flour, a material with a fineness approaching that of wheat flour and which is used largely as a filler in inlaid linoleum. It is used also in the manufacture of dynamite and other explosives and as a filler in plastics it is found in phonograph records, radio dials, knobs and many other items of everyday use. Chips and sawdust also can be converted into sugar which in turn can be fermented and manu factured into ethyl alcohol. Alcohol also can be obtained by fermentation of the waste liquor dis charged at pulp mills in the sulfite pulping process. In Europe this is standard practice at many sulfite mills. Waste sulfite liquor also can be treated with an alkali to obtain synthetic vanillin. However, one day's operation of the sulfite mills in the U. S. produces enough waste liquor to meet the nation’s vanilla consumption requirements of one year. Molasses made from practically any species of wood may prove to have a profitable future. At the present time the process requires a plant with a capacity of at least 30 to 50 tons of waste wood per day. However, the Forest Products Laboratory is conducting experiments designed to lower these requirements to 5 to 10 tons daily. Utilizing chip and/ or sawdust, this process may provide a profit able outlet for waste materials from many small sawmills or other woodworking plants. Many of the experimental uses of waste material are based on the utilization of lignin, the binding agent that cements the cellulose fibers together in wood. For example, it is possible to convert lignin into crude oil, hand lotions, hair tonic, and fertilizer. Many of these dramatic uses as yet are impractical. However, for a number of years lignin contained in wood chips has provided the basis for the wallboard industry in the U. S. The Masonite process of converting chips into wallboard is essen tially a means of utilizing the lignin in natural wood. Recently a new process for manufacturing wallboard from wood has been developed and is considered by many people in the industry to offer real opportunities for promotion. While there is considerable glamour to some of the products mentioned above and others that have been developed on an experimental basis, most of these are yet to be produced on a basis that would justify the capital investment that would be re quired. However, there are newly developed prod ucts that appear to offer real possibilities for prac tical commercial operations. One of these is the cross-laminated flooring developed by the engineers at the T.V.A. in cooperation with other research organizations. This flooring is produced on a continuous strip basis, utilizing the low-grade wood for the center Page 63 and bottom layers and high-grade wood for the top surface. In T V A ’s pilot plant work, all three grades were obtained from stand improvement cuttings, by selective grading of the thin strips produced from such log-grade hardwood trees or logs. Final con clusions with respect to some of the production problems have yet to be reached. Pilot plant opera tion indicate that this product can be manufactured on a profitable basis. A commercial tryout demon strated the need for mechanical improvements in the gluing machine, and production attempts were stopped pending such improvements. Developed as a means of utilizing the large quantity of lowquality hardwoods in the T V A region, the process might be well adapted to the Eighth District. Such a plant would provide a market for a large amount of timber growing in the district which normally is not merchantable. By providing such a market it would increase the income of woodlot and other timberland owners and at the same time would pro vide added industrial employment. In addition, by offering a profitable incentive to clear low-quality timber from the woods, it would also tend to in crease the value of the area’s timber stand. CONCLUSIONS AND SUMMARY The evidence indicates that in terms of timber supply there are opportunities for a considerable increase in the industrial utilization of timber grown in the Eighth District. However, there are several fundamental principles that should be given careful consideration in evaluating the merit or desirability of any proposal to increase the indus trial demand for timber in this region. These evolve directly from the close relationship between indus trial consumption of timber and the whole com plicated problem of maintaining and preserving or increasing the quality as well as the quantity of one of our basic natural resources. First, any addition to the wood-processing or wood-using industrial capacity should be based on an expectation of long-term operations, not on a desire for quick profits which too often results in an irresponsible policy of overcutting or “ mining” of timber rather than in “ cropping” the forests. New wood-using plants should provide a market for the types and quality of timber we now have in the district and in specific localities, as well as a market for the quality of timber we might have in the future. It would seem highly desirable for the district as a whole and particularly for individual localities that future expansion of the woodprocessing industry be directed at least in part toward greater use of low-quality hardwood trees. Page 64 New industries should be related to the present pattern of timberland ownership. Most of the acre age classed as forest land is in the form of small woodlots owned by individual land owners. This condition should be taken into consideration not only as a factor that may influence the availability of raw material for a processing plant, but also be cause a well-located plant could provide woodlot owners with an added incentive to properly man age their timber. W ood-using industries, both new and established, should prepare themselves to sell forest management to timberland owners and wood suppliers alike. Further expansion should be consistent with the present and potential level of labor skills in the community. Some types of wood-processing opera tions, notably those employed in the manufacture of furniture, require highly-skilled craftsmen, while other plants, particularly those in the basic lumber industries, have somewhat lower-average require ments. In many parts of the district highly-skilled wood workers are not available. However, the wartime experience of industry demonstrated the adaptability and versatility of labor and suggests the possibility of a fairly rapid development of many labor skills not now conceded to workers in this region. W ith few exceptions, industry in this area typi cally is on a relatively small scale. Large opera tions are confined principally to the industrial cen ters of the district where necessary capital, labor and other requirements are available on a suf ficiently large scale. In small communities, how ever, where capital and labor are less plentiful, but where an ample supply of timber is at hand, atten tion might well be given to the establishment of wood-processing plants as a means of utilizing not only the available financial and labor supply, but also the timber resources of the communities. In so doing, income not only would be increased through added industrial employment, but also by the additional income provided to the suppliers of the raw material. All these factors and perhaps more should enter into the question of the feasibility and desirability of expanding the industrial uses of wood in the ’ district. In general these principles are directed toward the objective of developing the industry in a manner that will provide new and steady em ployment for district workers and a stable market for the region’s timber. However, in no case should expansion occur at the expense of the basic forest resources. W eldon A. Stein Retail Credit Survey DISTRIBUTION OF SALES NINE TRADE LINES EIGHTH This article summarizes the results of the sixth annual Retail Credit Survey in the Eighth Federal Reserve District. The Survey results on a national basis will be available later in a publication pre pared by the staff of the Board of Governors. Addi tional copies of this article or copies of the national results may be obtained from this bank upon request. Fot the 1947 district Survey, reports were obtained from 455 retail outlets in nine trade lines. Sales volume of respondents in 1947 approximated $430 million. Reporters furnished data on total sales, sales by type of transaction, inventories, markups, receivables (open account and instal ment), instalment paper sold and bad debt losses. All respondents included in the Survey grant some credit. Stores selling only for cash automatically are excluded from the Survey. Coverage for the district Survey differs in one major respect from that for the nationwide Survey. Many of the nationwide chain stores report data in consolidated form directly to the Board of Gover nors and these data cannot be allocated to the vari ous Federal Reserve districts. District respondents thus consist mainly of independent retailers and regional chains. Sales— The nine trade lines covered by the Sur vey, in combination, had 10 per cent more sales (in terms of dollars) in 1947 than in 1946. There were, however, substantial differences in sales gains among the different lines. Automobile dealers and household appliance stores, as might be expected, registered the largest sales increases. The backlog of consumer demand for goods sold by these types of retailers remains heavy, and sales were (and continue to be) limited by supplies available. Am ong the other durable goods lines, the increase in sales of furniture stores approximated the aver age for the nine lines combined. Furniture store sales were at a high level, but the gains came earlier than in other durables lines so that 1947 represented but a moderate increase over the already large volume of 1946. Hardware store sales gains were slightly above average. Automobile tire and acces sory stores showed a 6 per cent decrease, mainly due, it is reported, to the increased supply of new cars which lessened demand for accessories for older models. Jewelry store sales also were off, reflecting a movement back toward a more normal AUTOMOBILE FEDERAL R ESERVE DISTRICT, 1947 IN AND 1946 100 DEALERS AUTO TIRE AND ACCESSORY STORES DEPARTMENT STORES FURNITURE STORES HARDWARE STORES wmmmmam HOUSEHOLD APPLIANCE STORES JEW ELR Y mmmmMk mmvmm STORES MEN'S CLOTHING S :s WOMEN'S APPAREL 0 ■ I CASH B86M 25 cred h t 50 75 100 in s t a l m e n t relation of jewelry sales to total sales. During the war years and immediately thereafter, with many items in short supply, high purchasing power tended to focus on luxury goods. That situation gradually has become better adjusted. The chart shows the composition of sales by type of transaction for each trade line in 1946 and 1947. The general pattern is for a relative shrinkage in cash sales and for relative growth in credit sales as proportions of total sales. And this relative move ment is fairly uniform throughout all lines covered by the Survey, even though actual proportions differ appreciably from line to line. Cash sales increased absolutely at only three trade lines—automobile dealers, household appli ance stores, and hardware stores. Open credit sales in the durable lines were up in dollar volume at all lines except automobile tire and accessory stores. With instalment credit restriction first eased and then eliminated in 1947, instalment sales increased in all lines. , Among the various lines, open credit sales ac counted for more than half of total sales in 1947 at auto accessory, women’s apparel and men’s wear stores. Furniture store and auto dealers showed Page 65 the smallest proportions of such sales— 16.6 per cent and 18.9 per cent, respectively, of total sales. In instalment sales relative to total sales, furni ture stores stood out well ahead of any other line— 60 per cent of total sales being made on the instal ment plan. In several lines—men’s clothing, women’s apparel, hardware, and department stores — the dollar volume of instalment sales was rela tively small in comparison to total store volume but nevertheless recorded gains relative to total store volume. DEPARTM ENT Receivables— Total receivables at the close of 1947 were up substantially from the close of 1946 for all trade lines covered by the Survey. Gains ranged from 23 per cent at hardware stores to 82 per cent at appliance dealers. The easing of credit terms in most lines is indicated by the fact that the rise in receivables outstripped the gain in sales on credit percentagewise at all surveyed lines except automobile dealers and hardware stores. The table shows that the ratios of receivables to total sales (cash and credit) rose at all lines except auto dealers in 1947. The most pronounced in creases in these ratios occurred at furniture and jewelry stores in the durables lines and women’s wear shops in the nondurables lines. Bad Debt Losses—The ratio of uncollectable credit accounts to total credit sales increased gen erally throughout the nine lines of trade but still were quite small. Bad debt losses showed the larg est increases at men’s clothing, women’s apparel, and jewelry stores. At the end of the year about Yd, per cent of all credit sales of jewelry stores were reported as being uncollectable in comparison with about ^2 per cent at women’s apparel and men’s clothing shops. Bad debt losses on open credit accounts gained appreciably more at men’s wear and department stores than at other stores, but were only Ys per cent of sales in each case. W omen’s apparel stores, which have the largest proportion of open credit sales to total sales, reported that slightly less than per cent were counted bad debt losses. At jew elry and furniture stores, although open credit sales STORES Stocks Stock N et Sales on H and ____________ T urnover M arch, 1948 3 mos. Mar. 31,’ 48 com pared with 1948 com p, with Jan. 1, to Feb., M arch, to same Mar. 31, M arch 31, 1948 1947 1948 1947 period ’ 47 1947 .94 + 10% .94 Ft. Smith, A rk.. +42% + 6% + 19% .97 1.07 +23 + 19 .,+ 3 8 + 6 .86 .97 +49 +43 + 10 + 7 .86 +18 +30 .77 +49 +63 +25 1.02 1.06 + 14 + 19 +44 .96 .91 + 10 +35 + 7 + 9 .97 .91 +35 + 8 + 6 + 9 +23 +39 +45 Springfield, M o. .. +51 + 17 + 2 0 .75 .83 + 8 M emphis, Tenn. .. +38 + 3 + 18 .86 1.00 + 11 *A11 other cities.... .68 +49 + 15 +35 .82 + 6 8th F . R . District.. +39 + 14 .93 + 14 .95 + 9 *E1 D orado, Fayetteville, Pine B luff, A r k .; H arrisburg, Jacksonville, M t. V ernon, 111.; N ew A lbany, Vincennes, I n d .; Danville, H opkinsville, Mayfield, Paducah, K y . ; Chillicothe, M o .; and Jackson, Tenn. 1 Includes St. Louis, M o., East St. Louis, A lton and BelleviHe, 111. T rading d a ys: M arch, 1948— 2 7 ; February, 1948— 2 4 ; M arch, 1947— 26. Outstanding orders o f reporting stores at the end o f M arch, 1948, were 11 per cent less than on the corresponding date a year ago. Percentage of accounts and notes receivable outstanding M arch 1, 1948, collected during M arch, by cities: Instalment E xcl. Insta. A ccounts A ccoun ts F ort Sm ith.............. % 49% L ittle R o ck ...... 27 55 Louisville ........ 26 50 M em phis .......... 31 48 IN D E X E S Instalment E xcl. Instal. A ccounts A ccoun ts Quincy ............ ...29% 59% St. L o u is.......... ...36 55 Other cities .... 25 59 8th F. R . Dist. 32 53 OF D E PA R TM E N T STORE SALES A N D STOCKS 8th Federal Reserve District Mar. Feb. Jan. Mar. 1948 1948 1948 1947 .... 318 258 239 288 318 307 291 294 . 319 298 265 279 329 331 309 288 J D aily A verage 1 9 3 5 -3 9= 1 0 0. i End of M onth Average 1935-39 = 100. increased relative to total sales, the ratio of bad debt losses on open credit accounts declined in the year. Ratios of bad debt loss on instalment sales to total instalment sales increased in all but hardware stores where there was no change from the end of 1946. Furniture stores reported a little more than ^2 per cent of instalment accounts were listed as bad debt losses, a fractional increase over 1946. The largest increases in this ratio were shown in lines of trade where relatively small amounts of instalment credit were granted. At reporting women’s apparel and men’s clothing stores, 4 per cent and 2 per cent, respectively, of instalment accounts were listed as bad debt losses. Alfred C. Kearschner S U M M A R Y D A T A 1947 R E T A I L C R E D I T S U R V E Y S H O W I N G S A L E S , I N V E N T O R I E S , A N D R E C E I V A B L E S B Y K I N D O F B U S IN E S S — E I G H T H F E D E R A L R E S E R V E D I S T R I C T K ind of Business A utom obile Dealers ....................... A u to Tire and A ccessory Stores.. Departm ent Stores .......................... Furniture Stores .............................. H ardware Stores .............................. H ousehold A ppliance Stores........ Jewelry Stores .................................. W om en ’ s A pparel Stores.............. M en’s C lothing Stores.............. . Page 66 Total Net Sales + 54.5% — 6.2 + 3.9 + 10.0 + 13.2 + 3 2 .8 — 5.3 — 0.7 + 6.6 1947 Compared with 1946 Cash and Open C .O .D . Instalment D ec. 31 Credit Inventories Sales Sales Sales + 5 6 .6 % — 19.9 — 4.7 — 14.9 + 4.9 + 14.2 — 19.9 — 11.1 — 5.8 + 3 6 .0 % — 5.4 + 1 1 .7 + 1 0 .6 + 2 3 .0 + 3 2 .4 + 6.3 + 8.0 + 2 1 .5 + 7 2 .7 % + 9 8 .3 + 4 1 .7 + 2 3 .6 + 8 0 .6 + 6 8 .5 + 14.6 + 1 8 .8 + 3 6 .0 + 3 5 .7 % + 2 8 .3 + 2.0 + 2 0 .6 + 1 3 .5 + 5 4 .8 — 4.4 + 8.3 + 14.0 R atio of T otal N et Sales to Inventories 1947 1946 10.9 4.0 4.9 2.9 3.6 4.2 1.3 5.2 4.8 9.5 5.6 4.8 3.1 3.6 4.7 1.3 5.7 5.2 R atio o f Receivables to T otal N et Sales Open Credit Instalment 1947 1946 1947 1946 1.75% 6.43 9.26 5.43 5.35 3.74 8.33 14.34 10.57 2.33% 5.57 7.55 4.54 5.16 2.75 5.32 10.23 8.55 0.92% 2.83 2.17 22.21 0.81 8.15 12.53 0.73 0.17 0.90% 0.84 1.43 15.92 0.52 5.94 6.97 0.53 0.14 Survey of Current Conditions Recently published estimates of anticipated plant and equipment expenditures by American business indicate considerable strength in this part of the economy for the balance of 1948. According to a survey by the Securities and Exchange Commission and the Department of Commerce, industry in this country (excluding agriculture) expects to invest about $18.7 billion in new plant and equipment in 1948. Expenditures at this rate would be 15 per cent larger than actual outlays in 1947, the all-time record (but slightly below the very high rate of fourth quarter, 1947), and even when adjusted for the difference in price level would be at or above the 1947 level and larger than in 1929 or 1941, the pre war peak years. While these estimates are based on expected ex penditures, and thus are subject to change as general business sentiment changes, they are sig nificant in several respects. In view of the fact that this survey was made prior to the call for an increased defense program, which has increased the pressure for preparedness expenditures, these esti mates indicate that businessmen generally have S P E C IA L T Y STO R ES Stocks on Stock ____________N et Sales H and T urnover Mar. 1948 3 mos. compared with 1948 Mar. 3 1 /4 8 Jan. 1, to Feb. M arch to same com p, with Mar. 31, 1948 1947 period *47 Mar. 3 1 /4 7 < 1948 1947 M e n ’ s Furnishings + 7 6 % + 3% — 1% +23% .71 .84 B o o ts and Shoes +95 +32 +19 + 8 1.03 .97 Percentage of accounts and notes receivable outstanding M arch 1, 1948, collected during M a rch : M e n ’ s Furnishings ................. 55% B oots and Shoes....................... 46% T rading d a y s: M arch, 1948— 2 7 ; February, 1948— 2 4 ; M arch, 1947— 26. , R E T A I L F U R N I T U R E S T O R E S ** N et Sales Inventories R atio March, 1948 M arch 31, 1948 of compared with compared with Collections F e b .’48 M ar.’ 47 F eb.’ 48 M a r.’ 47 M ar.’ 48 M a r.’ 47 S t. L ouis A rea1.... + 3 2 % +37% — 18% +22% 39% 41% St. Louis .......... + 3 2 +38 — 18 +22 40 41 Louisville A rea2 .. + 2 7 +22 — 2 +16 19 27 Louisville ........ + 2 3 +28 — 4 + 9 16 25 M emphis ............... + 9 4 — 13 + 4 +44 20 25 Little R o c k ............ + 2 3 -0 +10 — 5 24 31 -8th Dist. T otal3.... + 3 3 +24 — 5 +17 30 35 * N ot shown separately due to insufficient coverage, but included in E ighth D istrict totals. 1 Includes St. Louis, M issou ri; East St. Louis and A lton, Illinois. 2 Includes Louisville, K en tu ck y; and N ew A lbany, Indiana. 3 In addition to above cities, includes stores in Blytheville, F ort S m ith ,'a n d Pine B luff, A rkansas; Hopkinsville, O w ensboro, K en tu ck y; sGreenville, G reenw ood, M ississippi; Springfield, M issou ri; and Evansville, Indiana. * * 4 6 stores reporting. PERCENTAGE D IS T R IB U T IO N O F F U R N IT U R E SA LE S* Mar. ’ 48 Feb. ’ 48 Mar. ’47 ‘Cash Sales .................................................... 14% 16% 21% C redit Sales .................................................. 86 84 79 T otal Sales ................................................ 100 100 100 *L ast m onth, figures appearing in the second tw o colum ns were in co rrectly reported. They should have read: Cash Sales, Jan., ’ 48— 17% , F e b ., ’ 47— 2 3 % ; Credit Sales, Jan., ’ 48— 8 3 % ; F eb ., ’47— 7 7% . considerable confidence in the capacity of consumer demand to support production and profits at a high level during the remainder of the year. These estimates also have significance in terms of production costs, prices, and profits. A large part of the $18.7 billion is expected to be spent for new machinery and other equipment. In 1947, purchase of these production goods amounted to $10.9 billion, or two-thirds of the total. The addi tion of new equipment should tend to increase pro duction efficiency and to offset increased labor and other costs. In many instances the installation of modern machines also should result in an actual reduction in unit labor requirements. EM PLOYM EN T Employment in the Eighth District increased slightly between February and March, after trend ing downward during the preceding two months. However, the increase in March, which lifted employment to a level approximately the same as in January and 2 per cent higher than a year ago, was less than seasonal. At the same time, the total number of man-hours worked was substantially higher in March than in February, when adverse weather, and fuel oil and gas shortages resulted in more temporary layoffs and a shorter average work week. The number of persons unemployed in March was somewhat smaller than in February and was about the same as a year ago. During the past year, the composition of the unemployed segment of the labor force has changed. The number of unemployed veterans has decreased and the number of unem ployed women has increased. The average length of time that individuals were seeking work was about nine weeks in March, 1948, which was con siderably less than a year ago. The fact that current employment is larger than a year ago, while the level of unemployment shows little change, is accounted for by an increase in the total labor force. It should be noted that during the past year the expansion in the number of women in the labor force was larger than would be ex pected from the increase in population. This would indicate that many women who gave up their jobs after the war apparently are returning to the labor force due to economic necessity and to an increased demand for their services. Page 67 The labor market is expected to become increas ingly tight during the spring and summer months in the Eighth District as well as in the nation. However, this district apparently has a larger sup ply of labor relative to prospective demand than does the nation as a whole. Employment increases are forecast for most of the major industries, with the largest gains expected in agriculture and con struction. Although the only serious general labor shortage probably will be in farm workers, spot shortages may develop elsewhere and the recruit ment of workers may become increasingly difficult. Total employment in the St. Louis Metropolitan Area remained stable between January and March, 1948. Employment in service and finance, insur ance, and real estate increased. Construction, pub lic utilities, and manufacturing employment held steady, while Government employment declined. In manufacturing lines, increases in durable goods industries were offset by decreases in nondurable goods industries. The transportation equipment industry showed a large gain and the food industry a large decline during the two months. During the next few months, employment increases are forecast for construction, manufacturing, public utilities, trade, and service. Currently, about 8,000 more workers are em ployed in St. Louis than a year ago, with 5,000 of this increase due to gains in the manufacturing industries. Employment in durable goods manu facturing dropped by 1,000 during the year as decreases in both electrical and nonelectrical machinery and in basic and finished lumber prod ucts more than offset increases in transportation equipment and in primary and fabricated metal products. In the nondurable goods industries, the increase is estimated at 6,000 workers with the prin cipal gains occurring in food, chemicals, textiles and apparel, and leather industries. Paper was the only nondurable goods industry to show a decline. All nonmanufacturing employment except Govern ment increased during the year. Construction, trade, finance, insurance, and real estate showed increases ranging from one to two thousand per sons, while the public utilities and service indus tries had relatively minor gains. The long-term trend in manufacturing employ ment in the district states is indicated by figures published recently by the Bureau of Labor Statis tics. In the seven states, about three-quarters of a million more people were employed in manufactur ing industries in 1946 than in 1939. Most of the gain occurred in the durable goods industries which increased 58 per cent as compared with 24 per cent in the nondurable goods industries. Total manu facturing employment increased 41 per cent in the district states and 43 per cent in the United States between 1939 and 1946. Kentucky, Mississippi, and Tennessee had the largest percentage increases in the district. INDUSTRY Over-all industrial activity in the Eighth District in March was at a somewhat higher level than in February. In some lines the gains reflected pri marily the longer work month. In others, increases on a daily average basis were registered, while in still others absolute declines took place. Com pared with March of last year, however, most parts of the industrial economy operated at a higher level. Production of coal*(because of the strike) was con siderably less than in February. Oil ouput also was smaller. Scheduled operations in the steel industry remained the same and lumber production increased slightly. Manufacturing plants averaged about the same rate of operations as in the previous month, while large gains were indicated in construction ac tivity. During the first quarter of 1948, industrial activity in this district apparently averaged 5 to 10 per cent higher than in the first three months of 1947. Total consumption of electric power in the dis trict's industrial centers in March was 14 per cent larger than in February and 16 per cent above March, 1947. Gains over the previous year were registered in all reporting cities and, except for INDUSTRY C O N S U M P T IO N O F E L E C T R IC IT Y M ar., F eb., Mar., Mar., ’ 48, (K .W .H . N o. o f Cus- 1948 1948 1947 Compared with in thous.) tomers* K .W .H . K .W .H . K .W .H . Feb., ’ 48 Mar., ’ 47 9,490 8,048 8,088 R + 1 8 % + 17% Evansville ........ 40 Little R o c k ...... 35 4,044 4,368 3,071 R — 7 4 -3 2 Louisville ........ 80 70,793 61,418 63,079 R 4 . 15 4 12 M emphis .......... 31 5,407 5,190 5,291 + 4 4 2 Pine B lu f f........ 24 6,071 4,677 1,076 + 30 + 4 6 4 St. L o u i s .......... 99 76,548 67,267 68,207 R + 14 + 12 Totals .......... 309 172,353 150,968 148,812 R + 14% + 16% * Selected industrial customers. R — Revised. Page 68 C R U D E O IL P R O D U C T IO N (I n thousands o f bbls.) M ar., ’ 48 Arkansas ................. 86.8 Illinois ..................... 170.0 Indiana ................... 17.7 K entucky ............. . 25.1 T otal ................... 299.6 F eb., ’ 48 87.3 174.1 18.2 26.0 305.6 M ar., '47 80.4 191.7 17.7 27.1 316.8 M arch, 1948, com pared with F eb., ’ 48 Mar.. ’ 47 — 1% + 8% — 2 — 11 — 3 - 0 — 3 — 7 — 2% — 5% 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 N ine D ays M ar., *48 F eb., ’ 48 M ar., *47 A p r., ’48 A p r., *47 3 mos. *48 3 mos. *47 125; 361 116,736 142,714 ' " 34,892 39,966 ‘ 362,820 389,983 S ou rce: Term inal Railroad A ssociation of St. L ouis. Little* Rock, all cities showed a month-to-month increase. However, on a daily average basis, power consumption by industries in March was nearly 6 per cent less than in February but was 6 per cent higher than a year ago. In the first three months of 1948, industrial power consumption was 12 per cent above that of the same period of last year. Manufacturing— March operations in most manu facturing plants were scheduled at about the same rate as in February. Aggregate output was gener ally higher, but it was due in a number of cases to the longer work month. On a daily average basis, production of automobiles, lumber, whiskey, and rubber products showed increases over the previous month, whereas a lower rate of operations was indicated in the manufacture of chemicals, electrical equipment, food products, metals and metal prod ucts, stone, clay and glass products, and transporta tion equipment. In terms of total output for the month, increases were indicated in all the above mentioned industries. Steel— Operations of the basic steel industry in the St. Louis area in March were scheduled at 65 per cent of capacity, the same as in the previous month but substantially less than the 77 per cent of capacity operations scheduled in March, 1947. Op erations of the open hearth furnaces in this area were relatively unaffected by the loss of coal pro duction. In the first three months of 1948, steel op erations averaged 69 per cent of capacity, about the same as in the first quarter of last year. Lumber— Production of lumber was at a higher level than in February but below that in March, 1947. Average weekly production at southern pine mills increased 12 per cent in the month but was 8 per cent less than a year ago. Reporting southern hardwood mill operations at 78 per cent of capacity were unchanged from February, and only fraction ally less than a year ago. Whiskey—At the end of March, 53 of Kentucky’s 63 distilleries were in operation, 8 more than at the end of February but 5 less than at the same time last year. Reflecting the possibility of a re-application of restrictions on grain usage, the Kentucky distilling industry has increased output considerably and trade reports indicate that, if the present production rate continues, it could result in overproduction in terms of present prices and demand. In February, production of whiskey totaled 7 million tax gallons, more than two and one-half times larger than in the previous month but 36 per cent less than in Febru ary, 1947. According to trade reports, consumption of whiskey has decreased sharply recently. Meat Packing-—Meat packing operations in the St. Louis area in March on a daily average basis were at about the same level as in February, but total Federally inspected slaughter increastd about 22 per cent. In the nation, total meat slaughter de creased about 2 per cent. In the area, there were 486.000 animals slaughtered under Federal inspec tion as compared with 400,000 in February and 347.000 in March, 1947. The largest gains over Feb ruary were indicated in the slaughter of calves and sheep, which increased 58 and 37 per cent, respec tively. The large March slaughter brought the first quarter total to 1.4 million animals, 15 per cent more than in 1947 but nearly 20 per cent less than in the seasonally high fourth quarter of 1947. Shoes— District shoe production remained at a high level in February. On a daily basis, produc tion was about the same as in January, although aggregate production was about 4 per cent less. According to preliminary estimates, output in February totaled 8.4 million pairs as compared with 8.7 million pairs in January and 7.6 million pairs in February of last year. Trade reports indicate that fall prices of the lower grade lines are scheduled to remain at about present levels, due in large part to the recovery in hide prices plus the possibility of increased Army and Navy orders. However, mak ers of the better grade women's shoes have indi cated that prices will be lowered somewhat as a result of considerable consumer resistance to pres ent price levels. Mining and Oil— Daily average production of crude oil in the district in March declined during the month. The 300,000 barrel daily average production was 5 per cent less than in March, 1947. In all pro ducing district states, output decreased slightly dur ing the month and, except in Arkansas, was less than a year ago. In the first quarter, production aver aged 303,000 barrels per day, 4 per cent less than in the first three months of 1947 and slightly less than in the fourth quarter of last year. With U.M.W. mines not operating a good part of the time, coal production in the district in March dropped to 7.3 million tons as compared with 10.5 million tons in February and 11.4 million tons a CONSTRUCTION B U IL D IN G P E R M IT S (M o n th o f M arch) N ew Construction Repairs, etc. Cost N um ber C ost (C ost in N um ber 1948 1947 1948 1947 1948 1947 thousands) 1948 1947 Evansville ............. 94 80 82 $ 867 $ 285 110 $ 80 $ 77 581 530 182 233 104 64 .... 100 105 1,072 987 107 109 61 44 Memphis ...............1,177 656 4,998 1,613 186 196 147 180 St. Louis 267 .... 232 266 2,049 1,444 225 379 372 Mar. T otals.............1,793 1,254 $9.5671 $4,859 836 825 $819 $737 Feb. T otals........ .... 951 1,031 $4,372 $2,720 440 585 $526 $688 Page 69 year ago. Daily average production was 42 per cent below that of the previous month as compared with a decrease of 30 per cent in aggregate produc tion. Construction— The value of building permits awarded in the major district cities in March, total ing $10.4 million, was more than double the Febru ary total and 86 per cent larger than in March, 1947. The largest increase over February occurred in Evansville, although Louisville, Memphis, and St. Louis also registered substantial gains. All the reporting cities showed gains over last year, with increases ranging from 186 per cent in Memphis to 15 per cent in Louisville. The value of new construction permits totaled $9.6 million or 92 per cent of all awards. More than one-half ($5.5 million) was for residential buildings, which increased 171 per cent over the previous month and 119 per cent over March of last year, with substantial month-to-month gains re ported in all the cities. Measured in terms of dwelling units, Memphis again led the district cities with a total of 490 fam ily units. Permits issued in Louisville provided for 136 new dwellings; in Little Rock 72 new units were authorized, and Evansville permits were issued for 42 new dwellings. In St. Louis City, 83 W H O LE SA LIN G Stocks N et Sales Lines of Commodities Mar. 31, 1948 March, 1948 Data furnished by compared with com pared with Bureau of Census, Mar., 1947 Mar. 31, 1947 U . S. Dept, of Comm erce* F eb., 1948 — % — 35% A utom otive Supplies ....................... 4 -1 1 % — D rugs and Chemicals..................... -4-13 + 1 — + 18 D ry Goods .................................... .... + 3 1 +12 - 0 Groceries ........................................ .... + 3 5 +26 + 10 H ardware ...................................... .... + 9 — +38 P lum bing Supplies ......................... + 3 9 + 8 + 18 T ob a cco and its P rodu cts.......... .... + 1 5 + 10 + 18 M iscellaneous ................................ .... 4 - 9 + 16% + 12% ** T otal all lines........................... .... + 1 5 % * Preliminary. **Includes certain items not listed above. PRICES W H O L E S A L E P R I C E S IN T H E U N IT E D S T A T E S Bureau o f L abor Mar., ’ 48 com p, with Statistics M ar., ’ 48 Feb., ’ 48 M ar., ’ 47 Feb., ’ 48 Mar., ’47 (1926 = 100) + 0.4% 160.8 R 149.5 A ll Comm odities. , 161.4 4 - 8.0% 182.6 + 0.4 186.0 185.3 Farm Products. 4 - 1.9 167.6 + 0.8 172.4 F ood s ................ .... 173.8 4 - 3.7 Other ................ .... 147.7 147.5 R 4-12.7 131.1 -f- 0.1 R — Revised. C O N S U M E R P R IC E IN D E X Bureau o f Labor Mar. 15, Mar. 15, ’ 48, Comp, with Statistics Mar. 15, D ec. 15, 1947 Dec. 15, ’ 47 Mar. 15, ’ 47 1948 1947 (1935-39 = 100) 4-6.8% 156.3 — 0.1% Unite'd States ..... 166.9 167.0 4-7.7 167.9 155.8 — 0.1 St. L ou is ........ .. 167.8 4-8.6 158.8 — 0.6 M em phis ........... 172.4 173.5 R E T A I L F O O D P R IC E S Bureau o f Labor Statistics Mar. 15, Feb. 15, M ar. 15, Mar. 15, ’48, Comp, with 1948 1948 1947 Feb. 15, ’48 Mar. 15, ’47 (1935-39 = 100) 4 -6.8 % 204.7 189.5 — 1.2% U .S . (51 cities)..... 202.3 212.8 4-6.0 St. L ouis ..... .. 210.9 198.9 — 0.9 206.1 4-6.8 Little R ock .... 203.8 190.8 — 1.1 198.0 + 5 .4 Louisville ........ 193.9 183.9 — 2.1 M em phis ......... 219.9 224.5 4-7.2 205.1 — 2.0 Page 70 additional family units were provided, and in the county most of the 245 permits issued for new con struction were for single residential dwellings. TRADE Sales volume in many reporting retail lines in the district in March increased more than seasonally from February but comparisons with a year ago were mixed. The value of durable goods sales generally was larger than in February and showed gains over a year ago. Department stores also reg istered increases over both a month and a year earlier. Most nondurables stores showed March sales substantially higher than in the previous month but in a few lines sales were less than in the same month last year. March sales volume at reporting department stores in the district and in the nation as a whole was larger than in the previous month and in the comparable month a year ago. Seasonally adjusted sales volume in March in this district was 318 per cent of the 1935-39 average as compared with 294 per cent in March, 1947. On the basis of prelimi nary reports in April the year-to-year gain of 9 per cent apparently will be maintained. The gain over a year ago at district department stores was due primarily to a large increase in sales of homefurnishings, particularly mattresses, floor coverings, and major appliances. The dollar vol ume of apparel and other nondurable goods sold during the month was slightly larger than in March, 1947, but the gains were somewhat smaller than those registered in heavy goods— despite the fact that March volume this year included Easter buying. It should be noted also that the rate of increase over last year in total sales volume was larger in the basement store divisions than in the main store divisions. In some lines, notably women’s and misses’ apparel, increases over last year occurred in the basement stores while upstairs, where prices are higher, sales of apparel fell below March, 1947. In the main stores as well as in basement divisions, sales of women’s and misses’ accessories increased considerably more than sales of apparel as compared with last year. The percentage increase in sales of inexpensive dresses, blouses, skirts and sportswear was con siderably larger than the increase in sales of suits, coats and better dresses. Department stores apparently have adopted a rather cautious outlook with respect to the future level of their sales. This is being demonstrated by a decline in volume of outstanding orders. Since the latter part of January, outstanding orders have declined in comparison with the same period in 1947. At the end of March, they were 11 per cent below March, 1947. In January, they were 2 per cent larger than a year earlier, and in February were only 3 per cent less than a year ago. It should be noted, however, that in the first quarter of 1947 the volume of ©utstanding orders was at a high level, and declined fairly sharply in the second quarter. On a seasonally adjusted basis department store inventories at the end of March, 1948, were below the February level, the first time in six months that stocks have failed (on an adjusted basis) to exceed the preceding month. The dollar volume of sales at district apparel stores in March increased substantially over Febru ary and was slightly above March, 1947. At women’s specialty stores, sales gained 47 per cent over the previous month and were 4 per cent above the com parable month a year ago. Men’s store sales, 76 per cent larger than in February, were 3 per cent over March, 1947. Inventories at both types of stores at the end of March showed little change from Febru ary, but were up 17 per cent and 23 per cent, respec tively, at women’s specialty and men’s wear stores as compared with March, 1947. Furniture sales at reporting stores increased 33 per cent over February and were 24 per cent greater than in March, 1947. An increasing number of lines were featured in special sales promotions in the first quarter of 1947, indicating that in some lines supplies are beginning to catch up with demand. Furniture store inventories on March 31, 1948 were about one-sixth greater than at the end of March, 1947, in terms of dollar value. BANKING P R IN C IP A L A SSE T S A N D L IA B IL IT IE S F E D E R A L R E S E R V E B A N K O F ST. L O U IS Change Mar. 24, A pr. 21, 1948 1948 (I n thousands o f dollars) Industrial advances under Sec. 13b.. 11,658 $— '2J 26 — 10,867 U . S. securities.............. T otal earning assets.. ...$1,137,689 $— 12,987 Total reserves .............. Total deposits .............. $4-30,998 4-19,855 — 8,155 Industrial commitments under Sec. 13b..$ - 0 - 580 from Apr. 23, 1947 $ .......... — 1,460 -1-18,966 $— 17,506 $4-40,471 4-56,779 4- 6,598 $— 3,060 P R IN C IP A L A SSET S A N D L IA B IL IT IE S W E E K L Y R E P O R T IN G M E M B E R BAN K S E IG H T H F E D E R A L R E S E R V E D IS T R IC T Change from Apr. 23, (I n thousands of dollars) A pr. 21, Mar. 24, 1947 Assets 1948 1948 T otal loans and investments........ ........ $2,018,936 $— 23,818 $— 49,350 (Comm ercial, industrial, and agri cultural loans, open market paper).. 540,223 — 27,841 + 97,145 Loans to brokers and dealers in se curities .................................................... 5.575 — 1,448 — 1,336 Other loans to purchase and carry 30,181 securities .................................................. 29,415 40 23,402 Real Estate loans....................................... 146,359 23 Loans to banks........................................... 2,560 936 496 42,549 Other loans ............................................... 190,906 6,408 Total loans ............................................. 915,038 132,515 22,322 Treasury bills ........................................... 39,076 1,038 10,645 4,888 Certificates of indebtedness................... 112,909 + 15,222 + Treasury notes ......................................... 82,642 70,405 3,521 U. S. Bonds including guaranteed obligations ............................................. 724,434 4485 — 118,410 Other securities ......................................... 144,837 1,024 3,037 + Total investments ....................... :....... 1,103,898 1,496 — 181,865 Cash Assets ................................................ 725,137 + 32,072 + 42,464 Other Assets ............................................. 25,008 686 1,315 Total Assets .......................................... .$2,769,081 $ + 9,569 $— 6,200 + Liabilities Demand deposits— total............................$2,103,065 Individuals, partnerships, and co r porations ............................................. 1,386,967 550,286 Interbank demand deposits.............. U. S. Government deposits............... 41,454 Other demand deposits....................... 124,358 Defriand deposits— adjusted* .............. 1,305,142 Tim e Deposits ........................................... 474,807 Borrowings ............................................... 5,000 Other liabilities ......................................... 14,859 Total capital accounts.............................. 171,350 Total liabilities and capital accounts $2,769,081 $+ 12,223 4. 28,701 15,819 2,313 2,972 12,515 1,193 3,000 1,638 791 + $ 4. 9,569 4- $— 14,983 4— — 4+ 4— — 4$— 45,111 58,630 17,003 15,539 33,095 8,676 6,900 1,364 8,371 6,200 * Other than interbank and Governm ent deposits, less cash items on hand or in process of collection. BANKING AND FINANCE Commercial, industrial, and agricultural loans at weekly reporting member banks in this district declined $32 million from mid-March to mid-April, continuing the downward movement of the past five weeks. The decline for the weekly reporting banks in this district conforms to the moderately downward trend of such loans throughout the nation from mid-January to date. Business loans in this district on April 14, however, were $103 million ahead of a year ago. Real estate loans for the same group of 34 banks also showed a slight decrease, $125,000, from March, but were up $24 million over a year earlier. “ Other loans” , largely consumer credit, rose almost $2 million for the month and were $38 million over April 16, 1947. As compared with a year ago, total loans were ahead $134 million, even after a decline of $30 million in the month. DEBITS TO DEPO SIT ACCOUNTS (In thousands of dollars Mar. 1948 Feb. 1948 Mar. 1947 E l Dorado, A rk .......$ 20,994 $ 17,619 $ 17,862 F ort Smith, A rk ..... 39,680 31,167 34,945 Helena, A rk. ............ 7,747 6,545 7,076 Little R ock, A rk ..... 121,419 98,420 111,513 Pine Bluff, A rk ....... 23,067 18,546 22,778 Texarkana, A rk.-T ex. 10,660 7,863 8,932 A lton, 111.............:...... 25,691 20,008 21,085 E .S t.L .-N a t.S .Y ., 111. 110,945 92,620 102,100 Quincy, 111. .............. 29,868 26,444 26,844 Evansville, In d ......... 108,691 90,413 88,379 Louisville, K y ........... 507,579 441,851 441,854 O wensboro, K y . ...» 25,973 25,928 26,870 Paducah, K y .............. 15,081 12,946 13,595 Greenville, M iss........ 18,418 15,643 17,951 Cape Girardeau, M o.. 10,679 9,254 9,514 Hannibal, M o ............ 7,332 6,167 7,500 Jefferson City, M o... 39,609 44,565 34,858 St. Louis, M o ......... 1,576,993 1,273,459 1,336,105 Sedalia, M o. ............ 6,365 8,621 9,329 Springfield, M o ......... 53,126 46,482 50,077 Jackson, Tenn. ........ 16,831 14,410 15,370 Memphis, T enn......... 544,488 440,062 473,511 M ar. ’ 48 com p, with Feb. ’ 48 M ar. ’47 4 -1 9 % 4-27 4 -18 4-23 4 -2 4 4 -36 4-28 4-20 4-13 4-20 4-15 - 04 -16 4 -18 4-15 4 -19 —11 4 -2 4 — 26 4 -1 4 4 -17 4 -24 4 -2 1 % 4 -1 8 % 4.14 4- 9 4* 9 4- 1 4 -19 4-22 4- 9 4 -H 4-23 4-15 — 3 + 11 3 12 2 + + — + + — + 14 18 32 6 + 10 + 15 +15% Page 71 Total investments continued to run below the preceding year, a movement in evidence since the first week in June, 1946. As of April 14, 1948, total investments of weekly reporting member banks were $17 million below the preceding month and $170 million below April 16, 1947. While the de crease from a year ago has been greater in dollar volume in the long-term Treasury bonds ($107 mil lion as compared with $64 million for bills, certifi cates and notes combined) the change in the shorter term securities has been greater relatively (44 per cent compared to 13 per cent). Earning assets, as a result of these two diverse movements ($134 million increase in loans and $170 million decrease in investments), decreased $36 million for the year. The effect on bank earnings of this decline in earning assets is in part offset by the higher rate of return obtained on loans as compared with investments. Reflecting the contraction that has taken place in bank earning assets, total demand deposits were $40 million less than on April 16, 1947. The in creases in demand deposits of individuals, partner ships, and corporations of $27 million and in “ other” demand deposits of $14 million were more than offset by decreases in U. S. Government and inter bank deposits. Interbank deposits were reduced during the year by $59 million and U. S. Govern ment deposits by $22 million. Time deposits were $9 million ahead of mid-April, 1947. AGRICULTURE Substantial shifts will be made by farmers in Eighth District states in wheat, oats, soybean and tobacco acreages during 1948 if they are able to carry out their March 1 plans. These plans called for increases over last year of 19 and 14 per cent, respectively, in wheat and oats acreages, and for substantial reductions in soybean and tobacco acre ages. The table gives these and other comparisons. The increased wheat acreage may be attributed to the encouragement given farmers by last year’s high prices. Oats acreage increases were scheduled in order to renew feed stocks left low or depleted by the short 1947 corn crop. The gain over last year also reflects the fact that 1947 plantings of oats were held down because of weather. Fields for the additional oats will be provided for by the reduc tion in soybean acreage noted above. However, unfavorable weather during the latter part of March and the first two weeks of April has limited field work. As a result, some of the intended oats acre age probably again will be planted to soybeans or corn. As shown by the table, contemplated tobacco Page 72 P R O S P E C T IV E P L A N T IN G S Indicated A creage United States Corn.................................. W heat.............................. Oats.................................. Soybeans......................... T o b a cco ........................... B arley............................... R y e ................................... Potatoes........................... H a y ................................... R ice .................................. 1948 1948 Indicated A creage compared with 1947 8th D istrict States United States (Thousand A cres) 86,131 26,216 78,437 6,309 45,709 8,716 11,659 6,630 1,328 454 12,660 289 3,726 633 2,162 158 74,215 13,658 1,666 360 8th District States (P ercent Change) *0 - % 4 -2 % 4- 1 4-19 4- 8 4*14 — 10 — 10 — 12 — 7 4- 5 4 -1 4- 1 4 -4 4 -1 — 8 — 1 — 2 — 1 - 0 - S ou rce: B A E , Crop Production, M arch, 1948. acreage has been reduced less in district states than nationally. This reflects the fact that burley tobacco acreage (predominant in district states tobacco growing regions) was reduced only 2 per cent com pared with reductions up to 26 per cent in acreages of other types. For all crops combined, weather permitting, a slightly larger acreage will be seeded in the 1948 crop year than in 1947, both in the district states and for the United States as a whole. Prospective winter wheat production in the United States, according to latest estimates, is expected to be nearly one-fifth less than the 1947 record crop, but in district states a substantial in crease is expected. On both a regional and national basis, this would be a good harvest—23 and 25 per cent, respectively, above the average crops for the ten years, 1937-46. The wheat crop in each of the three important district states is expected to be substantially higher than in 1947, ranging from a 25 per cent increase in Missouri to 11 per cent in Indiana and 8 per cent in Illinois. If this crop is realized, Eighth District states will produce 14 per cent of the nation’s winter wheat in 1948, compared with 9 per cent in 1947. AGRICULTURE CASH FA R M IN C O M E F eb. *48 com p, with ( I n thousands o f dollars) F eb., 1948 .. 115,370 .. 63,336 K entucky ...... .. 28,097 33,852 Mississippi .... 65,337 Tennessee ...... .. 30,046 ..$372,870 R E C E IP T S A N D Jan., 1948 4 -4 4 % — 33 — 23 — 66 4-39 — 22 — 39 — 29% 12 month total M arch to Feb. Feb., *47*'48 com p, witl ’ 45-'46 1947 ’ 47-’ 48 ’ 46-'47 « 0 -% $ 501,198 4 - 9 % 4 -6 3 % — 11 4-54 1,882,980 4-25 - 0 4-55 1,090,276 4-25 — 38 4-35 525,723 4-13 4-12 4-46 486,146 4-68 — 10 1,077,779 4-18 4-51 — 19 4-45 481,874 4-15 — 10% $6,045,976 4 -2 3 % 4 -5 1 % S H IP M E N T S A T N A T I O N A L STOCK YARDS _________R eceipts_________ ________Shipments Mar. Mar.*48 com p, with Mar. Mar.*48 com p, with Feb. ’48 Mar. '47 1948 Feb. *48 Mar. ’ 47 1948 26,004 4 - 34% — 55% Cattle and calves...... 90,715 — 31% — 34% 4 - 21 4-37 66,332 H o g s ........................... 241,330 4-17 4-36 — 50 6,822 4-195 Sheep .............. .......... 39,692 4 -36 -f.25 — 47 1,802 4 - 16 H orses ..................... . 1,802 4-16 — 47 100,960 4 - 2 9% — 18% T otals .....................373,539 4- 1% 4 - 7 %