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Monthly Review
MAY, 1952

Volume X X X IV




Number 5

A statement on sources-and-uses-of-funds meas­
ures the flow of money and credit through the
district economy, showing by whom and for what
purpose money is spent and received

.

Sources and Uses

As to sources of funds in 1951, income originat­
ing in current production was as usual the largest
single item Other income ( “transfer receipts9)
9
and liquidation of assets were significant sources
of funds Borrowing from banks and other lend­
ers supplied vital additions to the total money
flow In contrast with 1950, when short-term bor­
rowing provided the bulk of all credit receipts,
long-term business borrowing and equity financing
provided the major share in 1951

.

of
Eighth District Funds

.

•

.

in 1951

As to uses of funds in 1951, most expenditures
were made for current consumption in the house­
hold group and for costs of operation in the busi­
ness group An increased share of total payments
was used for taxes and “ transfer payments 9 Cor­
9
porations stepped up their capital expenditures
(where in 1950 they built up inventories), while
individuals added to their liquid savings (where
in 1950 they spent more on durable goods and
houses

.

).

The sources-and-uses analysis of the district’s
money flows and cash balances in 1951 suggests
that changes in financial transactions, though rela­
tively small, had a strategic influence on economic
activity and highlight the important role of dis­
trict financial institutions, particularly the com­
mercial banks

.

A statement on sources-and-uses-of-funds meas­
ures the flow o f m oney and credit through the
district econom y, showing hy whom and fo r
what purpose m oney is spent and received.
The Eighth District money supply (all demand
deposits except interbank, time deposits and cur­
rency plus coin in circulation) increased about $500
million (6 per cent) in 1951. In the preceding year
the gain was $400 million (5 per cent). Nationally,
the private money supply rose $9 billion in 1951
as against $7 billion in 1950.
But the velocity of money was declining through­
out most of 1951 in contrast to increasing sharply
in 1950, particularly in the second half. These dif­
ferences in trend of rate of use of the money supply
reflect and partly explain the sharply rising prices
of 1950 and early 1951, and the stable or declining
(wholesale) prices of most of last year.
For many years, the behavior of money and its
relation to prices, production, and income have
been studied. In recent years a new body of in­
formation has been in process of development—
data which give further insight into the working
of our economy. These data show by whom and
for what purposes money is spent and received.
To supply information on these points, in a
sources-and-uses-of-funds analysis, the economy is
divided into certain sectors whose financial de­
cisions seem to be broadly motivated by similar
considerations.
For example, individual house­
holds tend to base most of their decisions as to the
use of incoming funds on their present and antici­
pated needs as consumers and on their present and
anticipated incomes. Likewise, corporate business
units tend to base most of their decisions on pres­
ent and anticipated operating needs and on their
expectations as to future demand for their products.
In addition to individual consumers, business
proprietors, and corporate businesses, there are
other important sectors of the district economy
which should be considered in any complete ac­
counting of the flow of district money payments.
The Federal Government, state and local govern­
ments, commercial banks, life insurance companies
and other investors, all participate in the move­
ment of district funds and are excluded from more
detailed presentation in this article only because
not all the relevant data are available at this time.
It also needs special emphasis that district funds
move not only between the major sectors of the
district economy but flow into and out of the Eighth
District from other Federal Reserve districts and
Page 54




foreign nations. These interdistrict flows are of
considerable magnitude. A more precise formula­
tion of the sources and uses of funds owned by
residents of this district depends on the develop­
ment of accounts for the transactions of these other
sectors and on more complete information as to the
structure of the Eighth District “ balance of pay­
ments’’ with the rest of the nation.
Current income is always the largest single
source of funds. It is, however, by no means the
only source. Money flow receipts include not only
the income arising from current productive activ­
ity but also receipts from transfers or sales of
existing wealth or borrowing of titles to wealth.
“ Transfer payments” of the Federal Government,
such as interest on Government bonds or veter­
ans’ benefits, do not reflect current productive ac­
tivity but are an important source of funds for
many district households and financial institutions.
Liquidation of assets and borrowing in anticipation
of future income are other sources of funds; these
latter two financial sources, though not originating
in current production, play a vital part in the
process of creating and exchanging income. A
statement on the sources of district funds, therefore,
is essentially an extension of this Bank’s continuing
work on district income estimates— a program now
in its fifth year.
Turning to the “ Uses” side of the accounts, ex­
penditures are made for current operations, the
purchase of capital assets, or the retirement of debt.
In the case of individuals, expenditures for current
operations represent the purchase of consumer non­
durable goods and services (purchases of durables
are included in the “ purchases of assets” section) ;
in the case of businesses, they refer to payrolls,
the purchase of raw materials, taxes, and other
costs of production These operating expenditures
account for the bulk of all money uses and explain
the increased need for cash balances associated with
any expansion in economic activity or higher prices.
Increased holdings of money may also represent,
however, demands for additional liquidity or in­
creased savings temporarily awaiting investment.
In 1951, the latter use was much more important
than in 1950, a factor which goes far to account
for the differences in general economic behavior
over these two periods despite the apparent simi­
larity in the over-all growth of the money supply.
A more precise description of these differences is
the purpose of the following statement on the
sources and uses of Eighth District funds in 1951.

As to sources o f funds in 1951, incom e originat­
ing in current production was as usual the
largest single item .
Total funds received on personal and corporate
account in the Eighth District increased approxi­
mately $3 billion, 15 per cent, from 1950 to 1951.
The major sources of these funds and their relative
importance are shown on the left hand side of the
chart on this page.1
The upper part of the chart shows the movement
of corporate net operating funds as one of the
sources of corporate receipts. Net operating funds
represent all receipts by corporations from current
operations not spent for their current operating
costs. They include, in addition to net earnings,
funds set aside for depreciation and other reserves.
According to preliminary figures, this source of
district funds increased by 17 per cent during the
year. Despite the magnitude of this year-to-year
gain, however, it is important to note that corporate
earnings had already spurted to substantially their
1951 level by the fourth quarter of the previous
year. They did not share appreciably in the quar­
terly increments of district income thereafter.
This flattening out can be attributed broadly to the
greater stability of total sales volume, as well
as to less favorable price-cost relationships which
emerged in the course of 1951.
The transactions of each sector are recorded as
sources and uses of cash funds, total sources in each
sector balancing total uses. To indicate the basic
purposes for which funds are used, the uses side
of the balancing sources-and-uses accounts is di­
vided into several parts. The different sectors (or
transactors) may “ use” their money either for
building cash balances or for expenditures. Ex­
penditures, in turn, may be for current consumption
or operating expenses, for payment of taxes, for
payment of debts, or for the acquisition of capital
or liquid assets. Thus the moneyflow accounts
indicate the economic groups holding the deposits
and currency making up the money supply, what
proportion of total incoming funds these deposits
represent, and at what point credit enters the
1
Am ong the sources of
actions are recorded:

funds,

the

following

basic

types

of

trans­

includes all funds received for current productive
activity, such as wages, investment returns, and proprietors’ net profits.
In the case of corporations, this item represents all n et op era tin g f u n d s
and includes, in addition to net earnings, funds set aside for depreciation
and other cash reserves.
C u rren t

In c o m e

T r a n s fe r R e c e ip t s in c lu d e all fu n d s r e c e iv e d fr o m g o v e r n m e n t and
b u sin ess fo r w h ich n o s e r v ic e s are r e n d e r e d c u r r e n tly , such as in su ra n ce
benefits, v e te r a n s’ p en s io n s , or in te re st on G o v e rn m e n t debt.
S a le s o f A s s e t s include all funds received net from the sale of prop­
erty or financial claims, such as houses, cars, or government bonds.




economy. This credit, at times the basis for an
expanded aggregate money supply, may initially
be received at the consumer level to stimulate the

Corporations stepped up their capital
in
1 9 5 1 ____
Percentage
100

80

60

40

20

Distribution
_______ 0

expenditures

1951

2 0 _________ 4 0

SOURCES

m
if

EE
E
=

___ while individuals
liquid savings

_80

added

Percentage

-22-

40

from

1950

m

to their

O _________ 2 0

40

Change from

1950

USES

SO UR C ES

] SALES
] LONG
| SHORT
‘■C o rp o ratio n s-

CURRENT

IN C O M E *
R E C E IP T S

OF

TR AN SFER

BORROWING

IN C R E A S E

TERM

BORROWING

IN C R E A S E

o p e ra tin g

C O N S U M P T IO N
PAYM ENTS

PURCHASES

ASSETS

TERM

N et

of

USES

Percentage

| TR AN S FE R

holdings

Distribution 1951

20

SOURCES

I CURRENT

8 0 ________100

USES

Percentage Change

100

60

OF

IN
IN

ASSETS

F IN A N C IA L

<

CA SH

su rp lus

L o n g - T e r m B o r r o w in g includes all funds received from a net increase
in mortgage and other long-term liabilities. In the case o f corporations,
this item includes also all net new issues of stock.
S h o r t -T e r m B o r r o w in g includes all funds received from a net increase
in short-term liabilities, such as bank loans, trade payables, and all con­
sumer credit.

Note that, except for individual incomes, all sources of funds showT
n
are n e t rather than g r o ss. Present data limit analysis to the use o f n et
measures in most cases. The tota l amount of funds received was greater
than the n e t amount shown. It would be desirable to measure many flows
of funds on a g r o s s basis so as to get the whole picture o f money flows;
the use of n et measures, however, is helpful to point up over-all trends.

Page 55

flow of finished goods from dealers’ shelves, at the
business level to store additional finished goods
and raw materials in inventories, or at the business
level to finance construction of new plant and equip­
ment.
This article, in attempting to locate and measure
certain of the factors in the district’s economic be­
havior, presents provisional estimates for 1951 of
the flow of money payments into and out of the
hands of certain important sectors: individuals and
corporate businesses. The individual sector includes
farmers and other noncorporate business proprie­
tors and thus accounts for all those enterprises
whose economic decisions may be guided more
closely by family needs of their proprietors than
business requirements— at least more so than in
the case of most corporate entities.
The lower part of the chart presents the sources
of individuals’ funds, including farmers and business
proprietors. Income originating in current produc­
tion amounted to 80 per cent of all individual funds
in 1951 (76 per cent in 1950). The growth in the
proportion of current income to total funds received
reflects the expansion of district income in 1951
over its 1950 level. Nationally, personal income
advanced from $225 billion to $251 billion, and farm
income increased faster than nonfarm income. Be­
cause farm income represents a larger share of total
income for the Eighth District than for the nation,
district income increased at a greater than national
average rate and approximated $13 billion in 1951.
Payrolls of private industry made up the largest
share of district net income payments. Higher
average hourly earnings were the most important
single factor in last year’s payroll expansion, ac­
counting for somewhat over half of it. Most of
the remainder stemmed from increased employ­
ment; a shift of employment toward higher-paying
industries was an additional influence. The large
expansion of income originating in district agri­
culture has already been mentioned. W ith live­
stock prices rising much more than crop prices, and
with the moderate volume increase also primarily
in livestock, the latter phase of farm operations was
responsible for the bulk of farm income expansion
last year. Total net income earned by productive
activity in the private industries of the district ad­
vanced from $9.2 billion in 1950 to about $10.5
billion in 1951.
District income gains in 1951 were unevenly dis­
tributed both in terms of geography and industry.
Higher livestock prices boosted income in many
rural areas, and improved tobacco crop earnings
raised income in Kentucky. New defense facilities
Page 56




and reactivated Government depots added to the
income flow all along the Ohio River, in central
Arkansas, and around Fort Leonard W ood in the
Missouri Ozarks.
Income gains approximating one-fifth were regis­
tered in construction and agriculture. Within the
manufacturing division, there was little step-up
from 1950 in the average tempo of operations in
most nondurable goods factories. Of the other
major industrial divisions, only public utilities,
whose operations were significantly affected by the
heavy requirements for electric power, showed
major advances. In the trade, service, finance, and
transportation groups, income in 1951 expanded at
a more moderate pace.
As a result of the growth in total economic
activity, the distributive-share composition of dis­
trict income was appreciably altered last year. Em­
ployee compensation and farm proprietor’s income
rose in relative importance, while interest, rental,
and nonfarm entrepreneurial incomes, though also
advancing in absolute terms, lagged behind the
over-all movement.
Personal income from Government payrolls
showed the most striking year-to-year gain. This
was primarily due to the rapid growth of the
Armed Forces whose average strength last year
was roughly double that of 1950, and the reactiva­
tion of several large military establishments located
in the Eighth District. In addition, it reflected an
increase in Federal wage rates and in the rate of
civilian employment in defense and economic
stabilization agencies, as well as a moderate advance
in payrolls at the state and local level.
Other income ( “ transfer receipts” ) and liquida­
tion o f assets were significant sources o f funds.
Many individuals receive as “ income,” payments
which do not reflect current productive activity,
such as insurance benefits or veterans’ pensions.
Interest on government debt is also treated as a
“ transfer receipt.” These “ other income” payments
to district residents showed only minor changes in
1951. Another important source of funds was the
sale of farm realty, homes, cars, and other con­
sumer durables many of which are used as trade-ins.
District households and farmers derived about $600
million from these sales in 1951.
Net liquidation of financial claims, such as sav­
ings bonds (some of which matured in 1951) and
other securities, added approximately $60 million
to individuals’ cash receipts last year. It should
be emphasized that these estimates present net
data (e.g., the excess of savings bonds redemptions
over new purchases).

Borrowing from banks and other lenders supplied
vital additions to the total money flow.
In addition to current income and liquidation of
assets, credit extension by banks and other lenders
provides a strategic source of district funds. In
relation to total funds, however, these financial
sources were smaller in 1951 than in the preceding
year.
Corporate indebtedness rose by some $100 mil­
lion in 1951. Defense and defense-related businesses,
like metal and metal products manufacturers and
public utility companies, were an important factor
in business credit demand at district banks in 1951.
This was in decided contrast with experience a year
earlier when the volume of defense borrowing was
small and borrowing for nondefense purposes was
the dominant element in the much larger increase
of bank loans.
With retail inventory accumulation slackening,
trade credit expansion played a less important role
than a year ago in meeting the working capital
needs of district industries. Of major importance,
on the other hand, were new funds received from
the sale of corporate bond and stock issues. Under
the generally buoyant conditions which prevailed
in the stock markets last year, corporations were
able to float new issues substantially in excess of
total net flotations in any previous year during the
past two decades. Manufacturing concerns in par­
ticular were very active in sales of new issues, in
large part a reflection of the high fixed capital
requirements of firms engaged in defense-expansion
programs.
A substantial part of these new funds was raised
outside the district. Corporate indebtedness to
banks and other lenders of the district expanded
considerably less than the total financial sources of
corporations operating within the district. This
difference constituted a net inflow of funds into
the district on business capital account and was
offset by a corresponding net outflow of funds on
personal account (see first column, page 59).
Individual indebtedness also rose by some $100
million in 1951, compared with almost $300 million
in 1950. The largest share of these funds went to
farmers to finance the marketing of their crops and
capital expenditures. Individual proprietors in the
trade and service industries sharply reduced their
indebtedness as they cut down inventories. Total
consumer credit outstanding at all types of con­
sumer lending agencies increased about $20 million
or less than 3 per cent last year as compared with
almost 20 per cent in 1950. Outstanding consumer
instalment credit changed little in 1951, while it
had been responsible for most of the increase in




total consumer credit the year before. Individuals
received a substantial amount of new funds through
mortgages, though here too the rate of growth was
considerably slower than in the preceding year.
It should be kept in mind that debt repayments
wT
ere very heavy last year after the rapid credit
expansion in 1950. Data on net borrowing thus
tend to understate the significance of credit as a
source of funds for many businesses and house­
holds in the Eighth District. The most remarkable
fact, therefore, is not so much the slowing down
of further credit growth but rather the maintenance
of the very large credit volume established in the
preceding years.
In contrast with 19509 when short-term borrowing provided the bulk o f all credit receipts,
long-term business borrowing and equity fi­
nancing provided the major share in 1951.
Corporations received 20 per cent of their funds
from borrowing in 1951 as contrasted with 23 per
cent in 1950. Even more importantly, long-term
borrowing and equity financing for the creation of
additional productive capacity accounted for fully
half of all financial sources in 1951 as against only
35 per cent in 1950 when short-term borrowing for
business inventory accumulation played a much
larger role.
Individuals, including farmers and business pro­
prietors, received 5 per cent of their funds from
borrowing in 1951 as contrasted with 8 per cent
in 1950. Expansion of short-term consumer and
trade credit accounted for less than 2 per cent of
individual funds in 1951 as against more than 4
per cent in the preceding year when consumers
relied heavily on increased instalment credit to
finance their scare-buying and when proprietors
depended on increased trade credit to accumulate
inventories.
As to uses o f funds in 1951, most expenditures
were made fo r current consumption in the
household group . . . .
The uses of district funds are shown on the right
hand side of the chart on page 55.2 Many receipts
can be used either for payments or for increased
holdings of cash balances. Payments in turn may be
2 A m ong the uses of funds, the following basic types o f transactions are
recorded:
Current Consumption includes all expenditures by individuals for
nondurable consumer goods and services.
Transfer Payments include all expenditures for _ which no specific
services are received in return, such as gifts or private charities. I n ­
come and profit taxes are also included under this heading.
Purchases of Assets include all expenditures for the acquisition of
tangible assets, such as durable consumer goods and houses fo r indi­
viduals, or inventories and capital equipment for business.
Increase in Financial Claims includes all net expenditures for the
acquisition of financial assets, such as government bonds and corporate
securities.
Increase in Cash includes all funds held for net additions to currency
and deposits.

Page 57

PERSONAL EXPENDITURES— 1950
United States

Consumption.........................................................
Food and Tobacco....................................
Clothing and Accessories.......................
H ousing.........................................................
Household Operation..............................
Transportation............................................
Other Consumption Expenditures..
N et B alance*...... .......................................
Taxes.......................................................................
Federal............................................................
State................................................................
Savings....................................................................

1,230
418
151
109
175
150

Total.........................................................................

1,436

220
7
135
117
18
71

Eighth District

929
317
110
73
123
127
148
31
84
71
13
42
1,055

Arkansas

755
255
93
43
95
106
98
65
47
34
13
23
825

Illinois

Indiana

Kentucky

Per Capita (Dollars)
936
1,000
333
352
81
56
93
96
114
105
113
147
144
168
58
76
86
118
73
105
13
13
48
47
1,070
1,165

Missouri

Tennessee

81
67
14
38
1,046

584
236
71
36
62
82
69
28
35
25
10
18
637

1,147
370
135
97
164
151
212
18
119
104
15
63
1,329

873
300
192
53
155
120
132
— 79
65
51
14
37

88.6
30.1
11.3
7.1
11.6
12.2
13.2
3.1
7.8
6.4
1.4
3.6
100.0

91.7
37.0
11.1
5.7
9.8
12.8
10.9
4.4
5.5
3.9
1.6
2.8
100.0

86.3
27.9
10.1
7.3
12.3
11.4
16.0
1.3
9.0
7.9
1.1

89.5
30.8
19.7
5.4
15.9
12.3
13.5
■ 8.1
—
6.7
5.2
1.5
3.8
100.0

927
315
118
74
121
128
138
33

Mississippi

975

Per Cent Distribution
Consumption.........................................................
Food and Tobacco....................................
Clothing and Accessories.......................
H ousing.........................................................
Household Operation..............................
Transportation............................................
Other Consumption Expenditures..
N et Balance*...............................................
Taxes.........................................................................
Federal............................................................
State................................................................
Savings.....................................................................

85.7
29.1

10.6
7.6

12.2
10.4
15.3
0.5
9.4

8.2

1.2

88.0
30.0
10.4
6.9
11.7
12.0
14.1
2.9
8.0
6.7
1.3

91.6
31.0
11.2
5.1
11.5
12.9
12.0
7.9
5.7
4.2
1.5
2.7
100.0

85.9
30.3
4.8
8.2
9.0
12.6
14.5
6.5
10.1
9.0
1.1
4.0
100.0

87.5
31.1
7.6
8.7
10.7
10.6
13.4
5.4
8.0
6.8
1.2
4.5
100.0

4.0
4.7
100.0
100.0
100.0
Total..
* A positive net balance indicates the net amount of income payments which is spent outside the area.
A negative net balance indicates the net
amount of expenditures not originating in local income payments, but which flows into the area from outside.
4.9

for current operations, for the acquisition of assets,
or for the repayment of debt.
Total uses, in line with total sources, increased
approximately $3 billion, or 15 per cent, on individ­
ual and corporate account in 1951. In both cases,
the bulk of expenditures was made, as usual, for
current operations, consisting of consumer expendi­
tures for nondurable goods and services on house­
hold account and of operating costs on business
account.
Consumers’ expenditures for nondurable goods
and services in 1951 amounted to $7.2 billion, as
compared with $6.4 billion in 1950. The $800 million
advance represented less than half of the increase
in total funds, and the share of total funds used for
current consumption expenditures, which had been
55 per cent in the preceding year, was lowered to
53 per cent in 1951.
Purchases of nondurables, which had moved up
as prices rose in 1950, continued to expand slowly in
1951. District department store sales, the bulk of
which are in soft goods, were up 2 per cent over
1950, sales at men’s wear stores increased slightly,
and sales volume at women’s apparel stores ap­
proximated that of 1950. Food purchases were up
10 per cent, while expenditures for services, in­
cluding housing, increased 8 per cent.
More detailed data on the distribution of personal
expenditures (including durable goods, investments,
and taxes) within the district by areas are presented
3 The expenditure estimates presented in this table relate to 1950, as
detailed 1951 data are not yet available. Though consumer expenditure
patterns have changed over these two years, as explained in the text, the
table serves to illustrate the more basic distribution o f personal expendi­
tures among district areas and the resultant net inter-area flow of funds
on personal account.

Page 58




in the table shown above.3 This table lists all
expenditures made on personal account against
total personal income earned in the same year.
Any discrepancy between personal expenditures
(including savings) and income, points toward an
inter-area flow of funds on personal account. Where
expenditures are smaller than income earned by
residents of the area, the positive “ net balance”
measures the net outflow of funds spent outside the
area. Where expenditures are larger than income
earned, the negative “ net balance” indicates funds
spent by nonresident visitors. Many district areas
show a substantial net outflow on personal account,
indicating that the residents of these areas spend
part of their income outside the home community
without a corresponding inflow of funds spent by
visitors. Only the district portion of Tennessee
shows a substantal net inflow, indicating the dom­
inant position of Memphis as a trade center for
large parts of Arkansas and Mississippi. On the
other hand, the district portion of Illinois has a
large net outflow of funds, primarily due to the
importance of St. Louis as a metropolitan center
to serve the residents of southern Illinois.
The Eighth District as a whole has a net balance
substantially larger than that shown for the United
States. The national net outflow of funds on per­
sonal account indicates the extent to which Ameri­
cans buy more goods and services abroad, by
sending remittances to other countries or traveling
abroad, than foreigners do in this country. Sim­
ilarly, the larger district net outflow measures the
net effect of expenditures district residents make

for the purchase of goods and services beyond the
district line. Partly, this net loss of funds on per­
sonal account simply indicates that district bound­
aries have been drawn so as to exclude some
important trade centers just beyond the line, such
as Kansas City and Cincinnati. Partly, it reflects
the relative lack of tourist facilities in the district
to attract more non-residents whose spending
might balance that of district residents “ abroad.”
Partly, it is due to the general tendency of any less
urbanized area to buy highly specialized profes­
sional and financial services in the very large
metropolitan centers of the nation, such as Chicago
and New York.
The net outflow of district funds on personal
account is offset by a net inflow on business and
government account. As noted above, national
corporations spend some “ outside” funds for capital
expenditures and current operations in the district,
and the Federal Government transfers funds from
high-income states to low-income areas. Most
importantly, many district producers receive “ for­
eign” funds on business account for the sale of their
goods in a national market.
It should be emphasized that the net in-or-outflow of funds as such does not imply any criteria
for their desirability. Large interdistrict money
flows reflect the vital role of the district in the
national economy which fortunately does not
recognize district boundaries as barriers to the
interregional exchange of goods and services.
Neither does the net in-or-outflow on any particular
account as such indicate anything “ good” or “ bad” ;
different groups of transactors of necessity will
always balance their accounts with other transactors
wr
ithin and outside the district economy in the
formal sense that any system of accounts must
balance if the statement of sources and uses of funds
is complete. The only real importance attaches to
the final economic use of the funds, not their local
origin and destination. It has been the traditional
characteristic of areas in the process of rapid eco­
nomic development to show a net outflow of funds
0 1 1 current account and a net inflow on capital ac­
count. In the case of the Eighth District, the net
outflow on personal account and the net inflow on
business and government account should be inter­
preted to point in this direction.
. . . a n d f o r c o s ts o f o p e r a tio n in th e b u s in ess

grou p .
To show more clearly changes in the financial
sources and uses of funds, the chart on page 55
presents only the net operating surplus and not the
gross receipts and expenditures of individual pro­




prietors and corporations on current business ac­
count. The size of these gross flows is suggested
by the fact that district business payrolls alone
amounted to more than $6 billion in 1951, more than
the sum of all the other uses listed on corporate
account. Total operating expenses on current busi­
ness account, including such items as labor, services,
materials, and power, surpassed $20 billion in the
past year.
An increased share o f the total payments was used
fo r taxes and “ transfer payments."
Of all expenditures, taxes have shown the most
startling increase in 1951, indicating the fiscal needs
of a defense economy. On corporate account, profit
taxes absorbed more than 25 per cent of all funds
spent for non-current-operating purposes in 1951, as
against 16 per cent in 1950. The recent change in
the scheduling of corporate tax payments reduces
the time interval over which tax accruals serve as a
source of financing.
Under the full impact of the 1950 tax rate in­
creases and the new imposts required in the tax law
of 1951, individuals used almost 13 per cent of their
total funds for direct tax payments in 1951, in con­
trast with 10 per cent in 1950. This sharp increase
of taxes slowed the rise in disposable income and
dampened other expenditures.
Transfer payments on corporate and individual
account, such as contributions to private charities
and endowments, have maintained their customary
share of total expenditures over the last two years.

C o rp o ra tio n s s t e p p e d u p th e ir ca p ita l e x p en d i­
tu r e s ( w h e r e in 1950 t h e y b u ilt u p in v e n ­
to ries), . . . .
While inventory accumulation was considerably
moderated in the latter part of 1951, pressure
for fixed capital expansion was steadily upward
throughout the year, with the additions called for
under the defense facilities program more than
offsetting the tapering off of less essential projects.
Capital expenditures increased from 31 per cent of
corporate non-current-operating funds in 1950 to 34
per cent in 1951. The largest part of this expansion
was for basic metals, such as steel, aluminum, and
magnesium. New chemical facilities, aircraft and
jet engine plants, as well as expansion of oil refinery
and coal mining capacity also were important. Rail­
roads, barge lines and other transportation agencies
added to their rolling stock and other equipment.
Within the district, the St. Louis area, Arkansas,
and the lower Ohio Valley saw the most rapid
expansion. Funds were spent for construction and
equipment of many different types of manufacturing
Page 59

operations in St. Louis and other metropolitan
areas of the district. New aluminum plants went
up in central Arkansas. Funds were used for ad­
ditions to oil refinery capacity in southern Arkansas.
The Ohio Valley boomed under the impact of capital
expenditures made in connection with new or re­
activated defense facilities in Louisville, a new
chemical plant in Brandenburg, and a new steel
plant in Owensboro. The largest project under
way was the Atomic Energy Commission installa­
tion at Paducah with two allied electric power
generating plants.
Increases in receivables and liquid assets of cor­
porations were lower last year due to the heavy
requirements for physical assets, coupled with
higher tax payments. O f particular note was the
decrease in customer financing. As a result, only 14
per cent of 1951 non-current-operating funds were
used for the acquisition of receivables and financial
assets as against 26 per cent in 1950. While deposits
of corporations held in Eighth District banks in­
creased by 19 per cent in 1950, they increased by
only 3 per cent in 1951.
. . . w h ile in d iv id u a ls a d d ed to th e ir liq u id sa v ­

in g s ( w h e r e in 1950 t h e y s p e n t m o r e o n d u r a ­
b le g o o d s a n d h o u s e s ) .
In contrast with the increase in expenditures of
corporations for capital assets, consumers reduced
their purchases of durable goods and houses in 1951,
using only 21 per cent of their funds for these
purposes against 23 per cent in 1950. Sales de­
clined in most district durable goods outlets, such
as household appliance stores, furniture stores,
automobile agencies, tire and accessory stores.
Home purchases were up slightly in dollar volume
but did not keep pace with the increase in consumer
funds, amounting to 9 per cent of total funds in 1951
against 10 per cent in 1950.
The moderation in home purchases during 1951
was attributable in large part both to direct con­
trols on realty credit imposed late in 1950 and to
the tightening of mortgage lending resulting from
money market developments in the past year. The
rise in long-term interest rates made the fixedinterest Federal Housing Administration and V et­
erans’ Administration loans relatively less attractive
to investors. Similarly, expenditures for consumer
durables were restricted to some degree last year by
the credit controls effective under Regulation W .
As individuals used a smaller share of total funds
for current consumption and capital expenditures,
anything left after paying taxes and other con­
tractual commitments was added to their holdings
Page 60




of liquid savings. These additions approximated 10
per cent of total funds in 1951 against 8 per cent in
1950. As indicated by the Deposit Ownership
Survey, personal deposits increased by 5 per cent
in 1951, in contrast with only 2 per cent in 1950.
Noncorporate business deposits increased by 16
per cent last year, compared with a loss of 3 per
cent during the preceding year. Even more striking
were the gains in other types of liquid saving.
Individuals, including private pension funds,
acquired more than $100 million of corporate and
municipal securities, in contrast with 1950 when
this item was negligible. Individuals also added,
at the normal rate, to their holdings of insurance
equities, pension reserves, mortgages and other
financial assets.
The past year thus witnessed a significant change
in recent savings trends. In the immediate postwar
years, there had been a marked preference for
tangible forms of personal saving, such as invest­
ments in homes and in the assets of unincorporated
businesses. The buying of durable goods, which has
many of the characteristics of savings, had also been
at a high rate. In the period 1947 through 1950, the
increase in mortgage, consumer, and personal busi­
ness debt, in connection with investment in tangible
forms of saving and consumer durable goods, was
greater than the increase in the ownership of such
financial assets as deposits, stocks and bonds, or
insurance equities. This tendency was reversed in
1951, when the acquisition of financial assets ex­
panded and backlog demands for durable goods
*disappeared.
It should be noted that the above data refer to
net additions to individuals’ financial assets. As
was noted in the analysis of net borrowing, all net
data average out significant differences in the be­
havior of individual spending units. W hile on bal­
ance individuals added more to their financial assets
than they reduced them, many consumers were
left in depleted financial positions after the postKorea buying sprees and in view of the increased
cost of living and higher taxes, were hard pressed to
replace their savings or to repay their instalment
debts in 1951. On the other hand, many consumers
received more income (after taxes) than in 1950 and
had not yet adjusted their spending habits upward.
In between these two groups were those who would
have spent more on durable goods and homes and
“ saved” less had credit terms been less restrictive.
The accumulation of financial assets by consumers
in 1951 should not necessarily be interpreted to
mean that consumers as a group have become more
conservative in their spending habits.

T h e s o u r ces-a n d -u ses a n a lysis o f t h e d is tr ic t’s
m o n e y flo w s a n d ca s h b a la n ces in 1951 s u g ­
g e s t s th a t c h a n g e s in fin a n cia l tr a n sa ctio n s9
th o u g h r e la tiv e ly sm a ll , h a d a s t r a t e g ic in flu e n c e o n e c o n o m i c a ctiv ity • . .
In the 1951 expansion of the district’s money flows
and cash balances, financial transactions played a
different role from that in 1950. First, their share
in the origin of total funds was smaller in relation
to current income, amounting to 20 per cent of cor­
porate sources (23 per cent in 1950) and 5 per cent
of individual sources (8 per cent in 1950). Second,
among the financial sources, long-term borrowing
and equity financing were more important than
short-term borrowing, the former amounting to
one-half (1950 less than one-third) of all corporate
financial sources and 60 per cent (1950 less than 50
per cent) of all individual financial sources in 1951.
Third, a larger part of financial funds was used
for business plant and equipment expenditures
rather than inventory accumulation, the former in­
creasing from 31 to 34 per cent of corporate noncurrent-operating funds in 1951. Finally, individuals
stepped up their financial uses from 8 per cent of
total funds in 1950 to 10 per cent in 1951, increasing
their financial claims and thus actively participating
in the process of business capital formation.
Current income and business operations always
provide the bulk of funds for the district economy,
just as expenditures for current consumption and
business costs always account for the main use of
total cash balances. Even in years when financial
transactions assume special importance, their rela­
tive size in dollar terms is therefore minor if com­
pared with the total sources and uses of funds. This
would be made more apparent if business funds
were listed “ gross,” accounting for all receipts and
expenditures, rather than “ net,” showing only the
net operating funds as in the Chart. But finan­
cial transactions, too, would greatly increase if
shown “ gross” rather than “ net,” and in any case
have a most strategic influence.
Credit extension and investment decisions are
based largely on anticipations. Because anticipa­
tions can change easily and tend to move to unwar­
ranted extremes as they run through their cycles of
change, credit extension and capital expenditures
are the most volatile items in the total structure of
funds. Further, rapid credit expansion tends to
stimulate other transactions, thus producing a mag­
nified effect on the total movement of funds. If these
other transactions are speculative in nature and tend
to withhold goods and materials from the markets
or to push effective demand for goods beyond avail­




able supplies, the increased money in circulation will
have an inflationary effect on prices. (T o some
extent, this is the story of 1950 when much of the
new money supply was used for inventory accumu­
lation and consumer buying.) If, on the other hand,
the transactions stimulated by credit extension are
directed toward the creation of new productive
capacity, business and consumers' anticipations take
account of the probable increase in flow of goods
and services in the near future, and inclinations to
withhold goods from the market or to accelerate
consumer spending currently tend to be dampened.
Certainly over the longer-run, the stimulation of
new productive capacity by means of credit exten­
sion tends to result in higher real income rather
than higher prices.
Similarly, financial uses of funds have an influence
on the total fund structure far beyond their im­
mediate size. Larger holdings of liquid assets by
certain transactor groups permit banks and other
financial intermediaries to extend credit for business
purposes without increasing the total active money
supply, thus delegating the responsibility for invest­
ment decisions to the financial community which in
turn assumes the task of channeling individual sav­
ings into productive investment. (T o some extent,
this is the story of 1951 when total funds and the
money supply expanded faster than bank debits
and deposit turnover, thus easing the inflationary
pressures of the preceding year.)
. . . a n d h ig h lig h t th e im p o r ta n t r o l e o f d istr ict
fin a n cia l in s titu tio n s , p a r ticu la r ly th e c o m m e r ­
cia l bank s .
To channel liquid savings into productive in­
vestment has been the traditional role of the finan­
cial community in a free enterprise society. Partly,
this is done by commercial banks, using the cash
balances of their depositors for the extension of
credit to other investors. Partly, it is done by com­
mercial banks creating new deposits, thus anticipat­
ing future income and savings. Partly, it is done
by other financial institutions. In each case, it is
the task of the financial intermediary to judge the
credit worthiness of the borrower and the economic
soundness of the use to which the borrowed funds
will be put. District economic development thus
depends to a very large degree on credit decisions
of the commercial banks.
The changes during 1951 in sources and uses of
district funds show the contribution the financial
community made toward adjusting strategic finan­
cial flows to their optimum levels for both stability
and growth of the district economy.
W erner H o c h w a u )

Page 61

Survey of Current Conditions
At mid-April business activity in the Eighth
District showed a slight increase from levels pre­
vailing a month ago. Industrial production im­
proved in some lines but failed to record the usual
gains in others. There was some interruption of
production due to work-stoppages, both on a local
and national scale, but very little output was lost.
Retail sales at district department stores during the
Easter season were slightly better than in 1951 and
employment was up moderately. Investment in
plant and equipment and home construction in­
creased seasonally.
Nationally, the physical volume of production
in March dropped 2 points from the February level
of 222 per cent of the 1935-39 average. Despite the
slight decline in March, production for the first
quarter of 1952 in the nation was slightly higher
than in the last quarter of 1951 and about equal
to the peak output of the first quarter of 1951.
Construction expenditures (seasonally adjusted)
were 8 per cent higher. Retail sales in department
stores remained at about the same level as in
previous months.
The total value of goods and services produced in
the United States in the first quarter of 1952 con­
tinued the upward trend of the past two years.
PRICES
W HOLESALE
Bureau of Labor
Statistics
( 1 9 4 7 -4 9 = 1 0 0 )

P R IC E S IN T H E U N IT E D

M a r ./5 2 F e b .,’ 52 .M a r.,’ 51

A ll Commodities................
Farm Products...............
Foods..................................
O ther..................................
R Revised.
—

1 1 2 .3
1 0 8 .3
1 0 9 .2
1 1 3 .9

CON SU M ER
Bureau of Labor
Statistics
(1 9 3 5 -3 9 = 1 0 0 )

United States..................
St. L ouis.......................
M em phis........................

1 1 2 .5 r
1 0 7 .8
1 0 9 .5 r
1 1 4 .2 r

P R IC E

1 1 6 .5
1 1 7 .6
1 1 2 .0
1 1 7 .3

1 8 8 .0
1 9 0 .2
1 9 0 .2

195 1
1 8 9 .1
1 9 0 .2
1 9 1 .4

-0 -%
+ 1
-0 -0 -

— 4%
— 8

—

3

—

195 1
1 8 4 .5
1 8 5 .2
1 8 6 .5

M ar. 1 5, 1 9 5 2 ,
compared with
Dec. 1 5 / 5 1 Mar. 1 5 /5 1
—

1%
-0 — 1

+ 2 %
+ 3
+ 2

*N ew series.
R E T A IL F O O D *
Bureau of Labor
Statistics
M ar. 1 5 , Feb. 1 5 , M ar. 1 5 ,
(1 9 3 5 -3 9 = 1 0 0 )

1952

U . S. ( 5 1 cities)..................2 2 7 .6
St. Louis....................... ....2 3 8 .3
Little R ock.................. .... 2 2 4 .3
Louisville...................... ....2 1 3 .2
M em phis....................... .... 2 3 1 .0
*N ew series.

Page 62




1952

195 1

2 2 7 .5
2 3 8 .6
2 2 4 .6
2 1 3 .6
2 3 4 .9

2 2 6 .2
2 3 9 .4
2 2 6 .8
2 1 4 .6
2 3 3 .8

M ar. 1 5, 1 9 5 2 ,
compared with
Feb. 1 5 / 5 2 M ar. 1 5 /5 1
-0 -%
-0 -0 -0 — 2

Over all, the first quarter record of the nation’s
economic activity shows a sustained high level of
output and a measure of stability. The outcome
of the steel wage controversy will have an import­
ant bearing on what the second and third quarter
of the year will show.
EM PLOYM ENT

Employment in the district picked up somewhat
from mid-February to mid-March, due primarily to
seasonal increases in construction and some manu­
facturing lines and to expanded defense and defenserelated production.
Total civilian employment in the United States
showed little change between early February and
early March as most outdoor activity was still
restricted. Nonagricultural employment also re­
mained practically unchanged from the previous
month at an estimated 53.7 million persons. In com­
parison with a year ago, however, 130,000 more
women were employed but 220,000 fewer men.

3

IN D E X *

M ar. 1 5 , Dec. 1 5 , M ar. 15,
1952

STATES
M ar., 1952
compared with
F e b ./5 2 M ar.,’ 51

The gross national product for the first three
months was estimated at $339 billion (seasonally
adjusted annual rate) an increase of $4.4 billion
from the previous quarter. The increase derived
from growing national security and personal con­
sumption expenditures. Outlays on durable goods
by consumers in the first quarter were unchanged
from the last quarter of 1951, but purchases of soft
goods and services increased. Consumers continued
to save at a rate substantially higher than in most
postwar years.

+
—
—
—
■
—

1%
1
1
1
1

Although total employment was down from its
year-ago level, the civilian labor force had shrunk
somewhat more. As a result, the labor market was
tighter in comparison with a year ago. The number
of persons seeking work during the first quarter of
1952 averaged about 2.0 million as compared with
2.4 million in the same months of 1951, with the
unemployment rate declining more for women than
for men. Also the average duration of unemploy­
ment for those seeking work was about nine weeks
in March compared with eleven weeks a year
earlier.

More people were at work in the St. Louis area
at mid-March than at mid-February, as construc­
tion and manufacturing activity increased. The
gain in manufacturing employment was due in
large part to expansion of defense output, slightly
larger output of automobiles, and seasonal increases
in some other civilian goods lines. The expansion
of employment in construction was largely sea­
sonal. Accompanying the growth in the number of
employed in the St. Louis area, there were evidences
of a tightening labor market. Unemployment de­
clined and defense plants began hiring a few women
for production work where they were not used
formerly. However, hiring specifications for women
continued to be somewhat restrictive as to age and
work experience.
In Louisville the decline in employment from Jan­
uary to February was regained in March. Ordnance
establishments continued to expand with the addi­
tion of nearly 1,000 workers to the payrolls from
January to March. Increased output of farm and
electrical machinery and in other metal industries
added another 1,000 workers during the same
period. Construction employment also rose.
W ith a substantial increase in defense and sea­
sonal manufacturing, even though nonmanufactur­
ing employment was about the same, total employ­
ment in Evansville set a postwar record in March.
Employment in Memphis showed only a seasonal
increase from February to March. However, non­
agricultural employment during March was 2 per
cent greater than a year earlier.
In Arkansas gains in construction and trade from
February to March mdre than offset a decline in
manufacturing employment. A large seasonal
decline in employment in the lumber industry
accounted for most of the decline in manufacturing.
W hile employment was somewhat higher than
February it was the third consecutive month that
total employment was below comparative 1951
levels.

in February. Temporary disruption at one plant
due to the steel-wage impasse dropped area opera­
tions to 73 per cent of capacity for the week ended
April 12, much better than the national average of
62 per cent. Despite the gain in March and early
April, furnace schedules in the district remained
lighter than those of a year ago when market
demand was higher and capacity less.
Use of electric power by manufacturing plants in
the district was greater in March than a month
and a year ago. Chemical, stone-clay-glass, and
primary metals industries accounted largely for the
increase over February. These industries were also
using considerably more power than a year ago.
On the other hand, fabricated metals and machinery
industries failed in March to record the gains they
have in past months.
Lumber operations in March and early April
held about even or were slightly down from those
of February. Compared with last year they were
down better than 10 per cent for both southern pine
and southern hardwoods.
Orders for shoes at shoe manufacturers in the
St. Louis area so far this season are substantially
higher than in the corresponding period a year ago.
Larger civilian orders more than offset a drop in
military orders. According to estimates by the
IN D U STR Y
C O N S U M P T IO N
( K .W .H .
in thous.)




E L E C T R IC IT Y — D A IL Y

M ar., 1952 Feb., 1952
K .W . H .
K .W . H .

Evansville..................
Eittle Rock...............
Louisville..................
M emphis....................
Pine B luff..................
St. Louis....................

813
577
4,017
1,542
459
4,960

759
601
3,753
1,526
507
4,661

M ar., 1951
K .W . H .
731
580
3,669
1,374
361
4,773

AVERAGE*
M arch, 1952
compared with
F e b .,*52 M a r.,’ 51
+
—
+
+
—
+

Totals..................... 12,368
11,807
11,488
+
*N ew series: Previous data were on total monthly basis.
*Selected manufacturing firms.
L O A D S IN T E R C H A N G E D
M ar.,’ 52

F e b .,’ 52

M a r .,’ 5 1

7%
4
7
1
9
6
5%

C R U D E O IL

+11%
— 1
+ 9
+12
+27
+ 4
+

8%

F O R 25 R A I L R O A D S A T S T . L O U I S
First Nine D ays
A p r ./5 2
A p r .,’ 51
3 mos. ’ 52
3 mos. ’ 51

109,154
112,784
132,803
33,351
35,840
332,522
Source: Terminal Railroad Association of St. I<ouis.

IN D U S T R Y

A gentle upward trend continued to be evident
in Eighth District manufacturing activity during
March and early April. But there was still some
gap between the level of last year and this. The
steel capacity rate continued upward, and shoe
production improved. District coal production de­
clined seasonally and lumber production had not
yet experienced any seasonal increase.
Manufacturing—The steel ingot production rate
in the St. Louis area continued to show improve­
ment in March and early April with furnaces run­
ning at 3 percentage-of-capacity points higher than

OF

346,027

P R O D U C T IO N — D A IL Y

(I n thousands
o fb b ls.)
Arkansas................................
Illinois....................................
Indiana...................................
Kentucky..............................
Total...................................

M ar.,
1952
76.5
165.1
30.3
35.4
3 0 7 .3

AVERAGE
M ar., 1952
Feb., M ar.,
compared with
1952
1951
F e b .,’ 52 M a r.,’ 51
76.2 79.5
- 0- %
— 4%
163.7
163.9
+ 1
+ 1
30.0
26.9
+ 1
+13
34.5
28.2
+ 3
+26

3 0 4 .4

2 9 8 .5

+

1%

+ 3 %

COAL

P R O D U C T IO N IN D E X
1 9 3 5 -3 9 = 1 0 0
____________Unadjusted_____________
______________ Adjusted_____________
M a r.,’ 52
F e b ./5 2
M a r . / 51
M a r ./5 2
F e b ./5 2
M a r ./ 51
1 30 .8P

1 6 2 .5 P

1 6 4 .9

137.7r

1 5 6 .2 p

1 7 3 .6

p— Preliminary.
S H O E P R O D U C T IO N IN D E X
1 9 3 5 -3 9 = 1 0 0
___________ Unadjusted_____________
_______________Adjusted_____________
F e b ./5 2
J a n ./5 2
F e b ./5 1
F e b ./5 2
J a n ./5 2
F e b ./5 1
144.2

143.9

154.7

136.0

141.1

145.9

Page 63

CONSTRUCTION
C O N S T R U C T IO N
B U I L D I N G P E R M IT S
M onth of M arch
N ew Construction
(Cost in
Num ber
Cost
thousands)
1952 1951
1952
1951
74
65 $
515 $
191
Evansville..........
Little Rock........
46
87
371
1,921
Louisville........... 167
144
733
7,2 4 0 **
Mem phis............ 1,863 1,471
5,426
2,615
St. Louis............ 265
277
3,102
3,612

Repairs, etc.

Number
1952 1951
93
81
190 185
108
60
235 242
.219 272

1952
$
75
126
142
194
564

M arch T o ta ls ..^ ,415 2,044 $10,147 $15,579
845 840
$ 1,101
669 485
$ 983
Feb. T otals....... 1,914 1,632 $ 5,739 $ 6,896
**Includes U . S. H ousing Project— $6,084,000 (854 units).

Cost
1951
$ 123
129
57
161
1,252
$1,722
$ 637

W H O L E S A L IN G
_______ Line of Commodities________
D ata furnished by
Bureau of Census,
U .S . Dept, of Commerce*
Automotive Supplies............................
D rugs and Chemicals...........................
D ry Goods.................................................
Groceries....................... ............................
Hardware..................................................
Tobacco and its Products..................
Miscellaneous...........................................

N et Sales
Stocks
M arch, 1952 March 31, 1952
compared with
compared with
Feb. 29, 1952
F e b .,*52 M ar.,*51
+
— 5
+ 3
+ 6
— 5
— 1
— 4

**TotaI A ll Lines.............................

6%
— 4
— 17
— 1
— 24
+ 9
— 8

- 0- %

— 14%

— 5%
+11
+ 5
— 2
— 6
— 4
— 4

— 12%

—

1%

* Preliminary.
**Includes certain items not listed above.

Tanners' Council, however, production nationally
is still running below that of 1951 and 1950, the
drop from the latter year being put at 6 per cent
for the first quarter. In April, shoe production
entered a slack in-between season.
Livestock sales at National Stock Yards, Illinois,
during March were 347,000 head compared with
315,000 in February. While March slaughter of
hogs by six main packers in St. Louis was the
smallest for that month in two years, pork stocks in
coolers on April 1 were greater than for any com­
parable date since 1937.
Whiskey production declined in March, with
28 distillers reported in operation in Kentucky at
month's end, compared with 30 in February and 63
in March, 1951. The market for both bulk whiskey
and case goods remained weak.
Mining— Coal production declined in March in
keeping with the seasonal trend. District states
production dropped 12 per cent compared with a
7 per cent drop from February nationally. In both
cases, production was below that of a year ago.
The daily average rate of crude oil production
in March in the four district producing states was
slightly above that of February and 3 per cent
over March a year ago. Refinery production in the
St. Louis area was reduced slightly in April due
to high stocks of gasoline which had accumulated.
Page 64




Construction activity in March rose more than
seasonally, largely as a result of an increase in
private home building. A substantial increase in
highway and military construction also contributed
to the gain.
New housing started in the first quarter totaled
243,000 units. The strength shown recently in
residential building may well continue through
1952, if plans revealed by the Board’s survey of
consumer intentions are carried out. The survey
showed that the public expected to purchase nearly
the same number of new houses as last year (when
1.1 million units were started) provided that ma­
terial, price, quality, and credit factors do not
change significantly. But housing for the middle
income group will probably constitute a larger
proportion of the new home market in 1952 than it
did in 1951.
The expansion of industrial plant is also a large
factor in the construction outlook. Expansion of
$16.6 billion in industrial facilities under the rapid
tax amortization program is only about one-half
completed. And pending applications cover projects
valued at $9.9 billion, of which about two-thirds
may be approved, if past experience holds true.
Another indication of this strength is seen in the
recent survey by the Department of Commerce and
Securities and Exchange Commission which esti­
mated that capital outlays for new plant and equip­
ment planned by business firms during 1952 will be
$24 billion, almost as much in physical volume as in
1951, and 4 per cent larger in dollar volume. During
the first half of this year planned outlays (on a
seasonally adjusted basis) will be higher than the
fourth quarter 1951 rate. In the second half of this
year expected investment will be only slightly below
the first-half rate.
The effect of the defense mobilization program
can be seen in the pattern of planned expenditures
by business on plant and equipment. Defenserelated facilities, in manufacturing, electric power
and gas utilities, mining and transportation other
than railroads, will be expanded at a greater rate
than last year. While producers of consumer goods
and commercial firms generally planned to spend
less this year than in 1951, the recent increased
materials allocation for these types of construction
may reverse the indicated trend.
Large expansions of industrial facilities in this
district noted during March were a new $3 million
aluminum castings plant of General Motors Corpor­
ation at Jones Mill, Arkansas, (proposed in April,
1951 but not approved for rapid tax amortization
by the Defense Production Administration until

this year), a $1 million expansion of the Corhart
Refractories Company plant in Louisville and a
$1.5 million expansion of the Delta Refining Com­
pany plant in Memphis.
In the Eighth District construction contracts
awarded during March totaled $106 million, an
increase of 129 per cent from February, and 10
per cent greater than a year earlier. For the
first quarter, residential construction contracts
were 20 per cent less than in the same period of
1951, but total contracts were 4 per cent larger
than a year ago as a result of increased construc­
tion of other types.
TRADE

Spring trade carried a favorable tone with the
Easter season this year apparently being somewhat
better than last year at district department stores
and a “ more than satisfactory” response being
reported for post-Easter sales. Specialty stores
were in less favorable position than a year ago,
however. And sales of durable goods were defi­
nitely on the weak side.
Besides making a favorable Easter showing, de­
partment store sales in the month of March (ad­
justed for the changing date of Easter) advanced
seasonally from their February level and were
slightly better than a year ago. Unadjusted sales
for the first quarter of the year were down 5 per
cent from a year ago. But many department store
executives had expected an even sharper drop since
last year’s sales were supported by the second
Korean scare-buying wave and an earlier Easter
season.
The sales picture at apparel stores was mixed.
Both men’s and women’s specialty shops showed
a better gain from February to March than de­
partment stores, but their sales decline relative
to a year ago was larger than at department stores.
Durable goods sales were definitely lagging in
March. Sales of furniture were below those of a
year ago (even though one-eighth larger than in
February), both new and used car sales were
below seasonal levels, and appliance sales were
only “ fair” in a few lines.
Inventories held by reporting district retailers on
March 31 were generally above those of a month
earlier, but below those of a year ago. Little
difficulty was experienced in maintaining adequate
stocks. Production of some hard goods was limited,
but this caused no retail inventory problem since
sales were low. The dollar volume of outstanding
orders at department stores was slightly less than at
the end of February, but higher than a year ago.




TRADE
DEPARTM ENT STORES
Stocks
on H and

Stock
Turnover

3 m o s /5 2
to same
period ’ 51

M ar. 3 1 /5 2
comp, with
M ar. 3 1 /5 1

Jan. 1 to
M arch 31,
1952 1951

— 7%
— 8
— 7
— 17
— 6
— 7
+23
— 6
— 1
— 5
— 6

— 13%
— 1
— 15
— 12
— 11
— 1

.85
.78
.81
.81
.70
.87

.84
.84
.76
.86
.74
.91

— 16
— 7
— 5
— 4

.87
.69
.91
.62

.84
.66
.93
.67

N e t Sales
M arch, 1952
compared with
F e b ./5 2 M a r ./5 1
f— + 1 7 %
c
.... + 26
. . . . + 11
,....+ 14
.....+ 22

— 7%
— 10
— 6
— 20
— 11
— 8
+ 19
— 5
— 8
— 6
— 10

....,+ 23
2 . . + 14
+ 24
+16
\ ...+ 21

* Fayetteville, Pine B luff, A rkansas; Harrisburg, M t. Vernon, Illin o is;
Vincennes, Ind ian a; Danville, Hopkinsville, Mayfield, K en tu ck y; Chilli­
cothe, M issouri; Greenville, M ississippi; and Jackson, Tennessee.
*In order to permit publication of figures for this city (or area), a
special sample has been constructed wnich is not confined exclusively to
department stores.
Figures for any such nondepartment stores, how ­
ever, are not used in computing the district percentage changes or in
computing department store indexes.
2Includes St. Louis, Clayton, M aplewood, M issouri; Alton and Belleville,
Illinois.
Outstanding orders of reporting stores at the end of M arch, 1952,
were 24 per cent smaller than on the corresponding date a year ago.
Percentage of accounts and notes receivable outstanding M arch 1, 1952,
collected during M arch, by cities:
Instalm ent E xcl. Instal.
Accounts
Accounts

Instalment Excl. Instal.
Accounts
Accounts
Fort Smith............ %
Little Rock.... 22
Louisville...... ,22
Memphis........ 23

INDEXES

Q uincy................
St. L ou is..............
Other Cities......
8 th F .R . D ist...

48%
47
50
40

OF DEPARTM ENT

STORE

62%
49
53
47

26%
19
22
20

SALES AND

STOCKS

8th Federal Reserve District
M ar.,
1952

F eb.,
1952

Jan.,
1952

M a r.,
1951

89*
99
118
111

80*
100
109
112

^ 81*
111
92
106

94
99
143
135

Sales (daily average), seasonally adjusted8....
*Daily average 1 9 4 7 -4 9 = 1 0 0 .
4End of M onth Average 1 9 4 7 -4 9 = 1 0 0 .

SPECIALTY STORES
Stocks
on H and

Stock
Turnover

M ar. 3 1 /5 2
comp, with
M ar. 3 1 /5 1

Jan. 1 to
March 31,
1952 1951

N et Sales
3 mos. *52
to same
p erio d’ 51

M arch, 1952
compared with
F e b .,*52 M a r.,’ 51

— 12%
M en’s Furnishings.... + 1 6 %
— 12%
— 10%
.50 .53
Boots and Shoes........ + 36
— 25
.86 .96
Percentage of accounts and notes receivable outstanding M ar. 1, 1952,
collected during M arch :
M en's Furnishings .................. 4 7 %
Boots and Shoes.......................... 4 4 %
Trading d ays: M ar., 1952— 2 6 ; F eb., 1952— 2 5 ; M ar., 1951— 27.

—1
1

+ 2

RETAIL FURNITURE STORES
N et Sales
M ar., 1952
compared with
F e b ./5 2 M a r ./5 1
8th Dist. Total1...
St. Louis Area3...
St. Louis...........
Louisville Area3..
Louisville..........
Mem phis................
Fort Smith..

+
+
+
+
+
—
+
+
+

11%
17
18
6
5
12
14
13
41

— 5%
— 8
— 8
+ 7
+ 6
+ 29
— 12
— 9
+ 1

Inventories
M ar., 1952
compared with
F e b ./5 2 M a r ./5 1
+ 2%
- 0- 0+ 2
+ 1

—
—
—
—
—

+
+

+ 16
— 5
*

6
3

*

15%
21
21
21
21

*

Ratio
of
Collections
M a r ./5 2 M a r ./5 1
23%
33
33
15
13
15
21
17
*

22%
29
29
14
13
15
19
17
*

*N o t shown separately due to insufficient coverage, but included in
Eighth District totals.
1 In addition to following cities, includes stores in Blytheville, Pine
Bluff, A rkansas; Hopkinsville, Owensboro, K en tu c k y; Greenwood,
M ississippi; Hannibal, M issou ri; and Evansville, Indiana.
2 Includes St. Louis, M issou ri; and A lton , Illinois.
3 Includes Louisville, K en tu ck y; and N ew Albany, Indiana.

PERCENTAGE D ISTRIBU TIO N OF FURNITURE SALES
M a r ./5 2
Cash Sales....
Credit Sales..
Total Sales..

12 %

F e b ./5 2
14%

86

100%

100%

M a r ./5 1
15%
85

100%

Page 65

BANK ING AND FINANCE

Financial data for March and early April indicate
that business loans declined less than usual and
agricultural loans increased about the normal
amount at Eighth District member banks. The
less than seasonal contraction in loans leaves total
bank credit outstanding $200 million above what it
was a year ago. Counterbalancing the quickening
effect of this larger volume of bank credit, was a
substantial shift of deposits from private business
and individual accounts to government accounts.
The shift reflected record income tax collections in
the month.
At all commercial banks in the country, loans
rose moderately during March. The gain centered
in loans to businesses, primarily metal manufac­
turers, and to farmers. Deposits, both time and
demand, were up in the month, but as in the district
there was a shift of funds from private to govern­
ment accounts.
District Banking Developments—Total loans at
district member banks remained almost unchanged
during March. The expansion of loans at smaller
banks nearly matched the $14 million reduction in
loans at larger city banks. (Normally, in March,
this reduction is proportionately greater.) The loan
contraction at the urban banks was nearly all in
loans to businesses, but loans to consumers and on
real estate were down slightly also. The business
loan contraction which, as noted, was less than
seasonal, reflected net repayments of advances on

E IG H T H

D IS T R IC T

M EM BER

BANK

ASSETS

inventories to commodity dealers (largely on cotton
at Memphis), sales finance companies and food
manufacturers. Partially offsetting these net re­
payments was an increase in borrowings by other
types of manufacturers, especially metal. Despite
the reduction of total loans to businesses in the
month, loans for defense purposes were up. The
major share of the loan expansion at smaller banks
took place in centers under 15,000 population where
agricultural loans usually expand at this time.
Investments rose $6 million in the month at all
district member banks. The gain was occasioned
by an expansion in holdings of “ other” securities
at the larger banks. U. S. Government securities
showed little change, on balance, as an increase in
holdings at the larger banks almost matched a
decline at the other institutions.
In the aggregate, demand deposits were un­
changed at district banks in March. The gain in
United States Government accounts ($77 million at
the larger city banks, largely reflecting the heavy
income tax payments) was roughly balanced by
declines in accounts of businesses, individuals and
banks. Time deposits rose $6 million in the month.
In early April, loans continued to decline (about
$8 million) at weekly reporting member banks in
the district. The decline was occasioned by a
seasonal reduction in business borrowings. All
other types of loans increased moderately. Demand
deposits were down also, but time deposits con­
tinued to increase.

AND

L IA B IL IT IE S

F e b ., 1952 M a r ., 1951
to
to
M a r., 1952 M a r ., 1952 M a r ., 1952
$4,197
1,889
1,922

7
14
13
27
5

$2,433
1,254
994
185
875
471
404
30

$+
—
+
+
—
+
—
—

5

—

1
1

—
+
—
+
—
—

F e b ., 1952 M a r ., 1951
to
to
M a r ., 1952 M a r ., 1952 M a r ., 1952

$ + 206
+ 32
+ 151
+ 23
+ 124
+ 54
+ 70
+
1

$+

GROUPS
Sm aller B a n k s 2

C h a n ge f r o m :

C h ange f r o m :

1. L o a n s and In v e s tm e n ts ............................... ........
a. L o a n s ............................................................. ........
b . U .S . G o v e rn m e n t O b lig a t io n s ...........

SELECTED

L a r g e C ity B a n k s 1

A ll M em ber
( I n M illio n s o f D o lla r s )

A ss e ts

BY

6

C h a n g e fro m
F e b ., 1952 M a r.,, 1951
to
to
M a r ., 1952 M a r ., 1952 M a r ., 1952
$1,764
635
928

9
9
18
3

$ + 99
—
4
+ 93
+ 10
+ 71
+ 34
+ 37
- 0-

526
254
272
17

$—
+
—
+
—
+
—
—

14
14

6

201

2

$ + 107
+ 36
+ 58
+ 13
+ 53
+ 20
+ 33
1
+

8

$ + 161

$— 13
— 2

$ + : 114
6
+
+ :108
+ 34
4
+
9
+

a. R es e rv e s w ith the F .R . b a n k ..............
b . O th e r C ash B a la n ce s 3..........................
3. O th e r A s s e t s ......................................................

1,401
725
676
47

4. T o t a l A s s e t s .......................................................

$5,645

$— 14

$ + 331

$3,338

$—

6

$ + 170

$2,307

$—

5. G ross D e m a n d D e p o s it s ............................. ........
a. D e p o s its o f B a n k s ...................................
b . O th e r D e m a n d D e p o s it s ......................
6 . T im e D e p o s it s ..................................................
7. B o r r o w in g s an d O th er L ia b ilitie s ...........
8 . T o t a l C a p ital A c c o u n t s ................................

$4,224
698
3,526

$ - 0-

$2,599
659
1,940
491
32
216

$+13
— 18
+ 31
+ 3
— 23
+ 1

$ + 146
+ 81
+ 65
+ 17
— 12
+ 19

$1,625
39
1,586
519

9. T o t a l L ia b ilities and C a pital A c c o u n t s . .......

$3,338

$—

6

$+170

$2,307

2 . R e se rv e s and O th e r C ash B a la n ce s ........

1
13
15

1
5
4
9

L ia b ilities an d C apital

1,010

— 20
+ 20
+ 6

42
369

— 23
+ 3

$ + 260
+ 87
+ 173
+ 51
—
8
+ 28

$5,645

$— 14

$ + 331

10
153

— 11
+ 3
- 0+ 2,
$—

8

$ + 161

1 I n c lu d e s 13 St. L o u is , 6 L o u is v ille , 3 M em ph is, 3 E v an sv ille, 4 L ittle R o c k and 4 E a st St. L o u is -N a tio n a l S to c k Y a rd s , Illin o is , banks,
2 In c lu d e s all o th e r E ig h th D is tr ic t m em ber banks. S om e o f these ban ks are lo ca te d in sm aller urban cen ters, b u t the m a jo rity are rural area b an ks.
3 In c lu d e s v a u lt cash , b alan ces w ith oth er banks in the U n ite d States, and cash item s r e p o rte d in p ro ce ss o f c o lle c tio n .

Page 66




District Savings Trends—In the nine months
following the outbreak
deposits declined $17
banks. The decline
sharpest at larger city

of hostilities in Korea, time
million at district member
was widespread but was
banks.

After the first quarter of 1951, however, time
deposit volumes increased throughout the remainder
of the year and recent reports indicate that the
high rate of district saving evident in the last three
quarters of 1951 continued in the first quarter of
1952. From March, 1951, through March, 1952, time
deposits at district member banks rose $51 million,
with the sharpest expansion in the first quarter
of 1952. A third of the gain was at larger city
banks, with all reporting centers sharing in the
growth. The expansion at banks in the smaller
centers was about equally divided between centers
under and over 15,000 population. In the smaller
centers member banks in Tennessee and Kentucky
had the largest percentage increase in time deposits.
The decline in the rate of redemptions of Series
A-E Savings Bonds likewise reflects savings trends
in the district. While redemptions of Series A-E
Savings Bonds have exceeded sales every month
but one since Korea, monthly average net redemp­
tions were much lower from March, 1951 to March,
1952 than in the first nine months after Korea. In
the first nine months, redemptions exceeded sales
by an average of $9.5 million per month. In the
following twelve months, average monthly net re-

DEBITS TO DEPOSIT ACCOUNTS
/T

ii

|

(In thousands
of dollars)

IV
lclI vllj 1x0^

M ar.,
1952

Feb.,
1952

E l D o r a d o , A r k ...............$
26,496 $
2 7 ,447
4 5,119
4 3,828
F o r t S m ith , A r k .............
H elen a , A r k ......................
8,547
7,594
k ittle R o c k , A r k ...........
154,456
136,263
P in e B lu ff, A r k ...............
34,128
32,749
T ex a rk a n a , A r k .* ..........
16,945
15,540
A lt o n , 111...........................
29,875
2 8 ,8 7 4
E . S t X .- N a t . S . Y . , 111...
123,752
119,147
Q u in c y , 111........................
35,078
3 3 ,134
E v a n s v ille, I n d ...............
137,341
129,667
L o u isv ille , K y .................
672,761
645 ,512
O w e n s b o r o , K y ...............
40,451
37,124
P a d u ca h , K y ....................
3 9 ,6 7 6
34,868
G reen ville, M is s ..............
23,351
2 1,964
C ape G irardeau , M o .....
12,738
12,272
H a n n ib a l, M o ..................
9,086
9,035
Jefferson C ity , M o ........
41,320
51,428
St. L o u is , M o .................. 1 ,889,178
1,714,146
S eda lia, M o ......................
10,906
11,113
S p rin g field , M o ...............
67,501
62,256
J a ck s on , T e n n .................
2 0,544
19,772
M em p h is, T e n n ...............
6 37 ,396
607,935

M ar.,
1951
$

2 8,457
47,649
8,844
151,872
31,113
14,152
31,843
138,848
3 7 ,9 9 6

143,416
672 ,010
46,312
21,067
23,691
13,583
10,045
47,043
1 ,9 3 8 ,0 9 0 r
11,734
69,432
21,916
705,097

compared with
F e b .,’ 52 M a r.,’ 51
— 4%
+ 3
+13
+13
+ 4
+ 9
+ 3
+ 4
+ 6
+ 6
+ 4
+ 9
+14
+ 6
+ 4
+ 1

+10
+20
— 6

— 11

— 8
— 4
- 0■ 13
—

5

+88
— 2
— 6
— 10
■ 12
—
— 3
— 7
— 3
■ 6
—
— 10

7%

—

— 20
+10
—

2

+
+
+

8
4

T otals............................. $4,076,645 $ 3 ,801,668 $ 4 ,2 1 4 ,2 1 0 r +

— 7%
— 5
— 3
+ 2

3%

* These figures are for Texarkana, Arkansas, only.
Total debits for
banks in Texarkana, Texas-Arkansas, including banks in the Eleventh
D istrict, amounted to $38 ,686 .
R Revised.
—




demptions were
net redemptions
of these bonds;
the same rate in

about $4.5 million. The decline in
reflected the lower rate of cashings
sales of new bonds were at about
both periods.

SHORT TE RM

BUSINESS

R E P O R T IN G

ST

LOAN

LOU IS

RATES

BANKS
Per Cent

Per Cent
4 .0 .

3 .5

3.5

3.0

3.0

2.5

25

2.0

i

.

1948

2 .0

i

1949

1950

1951

1952

'

Interest Rates on Business Loans— The average
rate charged on loans (over $1,000) to businesses by
reporting St. Louis banks was substantially higher
in the first half of March than in the first half of
December. The average rate on loans due in one
year or less made in the first fifteen days of March
was 3.40 per cent. This compared with a rate of
3.20 per cent for the first half of December and
2.98 per cent for the first half of March last year.
This increase in average rates from December
to March largely reflected the rise from 2^4 to 3
per cent in the interest rate charged to borrowers
with the highest credit ratings. Rates were higher
in March than December in seven size-of-loan cate­
gories and lower in two (those under $10,000).
AGRICULTURE

Farmers generally throughout the Eighth Dis­
trict up to mid-April were in need of several days
of warm, dry weather. Spring work in many areas
was somewhat retarded, and warm, sunny days
were needed to dry soil. Floods along both the
Mississippi and Missouri rivers resulted in damage
and delays in farm work in bottom land.
Page 67

PROSPECTIVE PLANTINGS EIGHTH DISTRICT STATES, 1952
(Acreage in Thousands)
Corn

O ats

Soybeans

Tobacco

Indicated
acreage
1952
Arkansas...............................
Illinois...................................
Indiana..................................
Kentucky..............................
Mississippi............................
Missouri.................................
Tennessee.............................

Change
from
1951

Indicated
acreage
1952

Change
from
1951

Indicated
acreage
1952

Change
from
1951

1,031
9,286

— 2%
+ 2
+ 2
— 3
— 2
+ 3
— 4

201
3,419
1,424
145
197
1,549
302

— 10%
- 0- 0+ 5
- 0+ 4
- 0-

890
3,588
1,593
214
690
1,745
322

+ 30%
— 4
— 4
+ 1
+ 15
+ 25
+ 4

2,115

25,510
District States...................
United States......................
Source: Crop Production, U S D A

+

1
- 0-

7,237
42,818

+
+

According to the March intentions-to-plant report
gathered by the United States Department of Agri­
culture, farmers throughout the nation will seed
almost as many acres this year as in 1951. The
indicated acreages will be less than the production
goals set by the Department of Agriculture for
important feed grains. Thus, corn acreage will be
6 per cent less, and barley and soybean plantings
12 and 24 per cent less than requested acreages,
according to farmers’ March plans. The indicated
oats acreage, however, will exceed both the 1952
goal and 1951 acreage by 3 per cent.
In district states, farmers in Illinois, Indiana, and
Missouri planned to increase corn acreage slightly
over the 1951 level, while those in the other four
states expected to make reductions. For the district
as a whole, intended corn acreages will be 1 per
cent above last year’s. The same holds true for oats
production. In the case of soybeans, large acreage
increases are indicated in Missouri, where many
farmers could not get crops planted in 1951 due to
wet weather and floods, and in Arkansas. Thus,
despite acreage reductions in Indiana and Illinois
(biggest district state producer of soybeans) dis­
trict acreage in this crop will be 5 per cent above
the 1951 level. Farmers plan a 3 per cent increase in
their tobacco acreages, reflecting an increase in
allotments, and intend to increase rice acreages to
record size in Mississippi and Arkansas.

1
3

9,042
15,457

+
+

Page 68




Rice

Change
from
1951

+

470

.........%
11
360

+
+

5
114

+**4
+ 3
+
+

510
1,971

4%

----------

........

4
3
+ 33

40

490
1,804

5
4

Chang*
from
1951

Indicated
acreage
1952

3
1

+

6
- 0-

district wheat-producing states, production is ex­
pected to be u p : 9 per cent in Illinois and Missouri
and 39 per cent in Indiana.
W IN T E R

WHEAT

P R O D U C T IO N

(B ushels in Thousands)
Indicated
Per cent
Per cent
production
change
change
1952
from 1951
from 1941-50
A rkansas................ ...........................
Illinois.................................................
Indiana................................................
K entucky............................................
M ississippi.........................................
M issouri.............................................
Tennessee...........................................
District States.................................
United States...................................

330
36,385

+ 18%
+
9
+ 39
—
4
+ 121
+
9
+
1

3,423
166

24,320
3 ,062
100,362
946,845

—
+
+
—
—
+
—

+
+

32,676

+ 15
+ 18

16
47

10%
35
10
34
32
18
30

Source: Crop Production U S D A

Prices received by farmers declined 1 point to
an index of 288 during the month ending March 15.
Prices paid by farmers and the parity ratio re­
mained unchanged from a month earlier.

A GRICULTU RE
CASH

FARM

IN C O M E

F eb .,
1952
,.$ 31,173
. 129,696
. 77,783
„ 28,947
22,093
„ 69,472
. 28,936

F eb., 1952
compared with
Jan.,
F eb.,
1952
1951
— 26%
+ 41%
— 20
+ 6
— 10
+ 13
— 73
+ 3
— 27
— 16
— 17
+ 3
— 40
+ 12

2 month total Jan. to Feb.
compared with
1952
1951
1950
$ 73,256
+ 25%
+ 59?0
290,699
+ 4
+ 10
163,730
+ 12
+ 24
134,053
+ 9
+ 4
52,216
— 17
+ 34
152,576
— 5
+ 29
77,134
+ 5
+20

.$388,100

( I n thousands
of dollars)

R E C E IP T S

The condition of the winter wheat crop improved
during March, and at the end of the month pros­
pective national production was 947 million bushels,
47 per cent larger than the 1951 crop. Smaller
percentage increases were expected generally in all
district states except Kentucky. In the important

Indicated
acreage
1952

— 30%

$943,664

AND

S H IP M E N T S

M ar., 1952
Cattle and calves.... 70,366
H o g s ............................ 299,699
Sheep...........................
37,090
Totals..

+

407,155

7%

AT

N A T IO N A L

Receipts
M arch, 1952
compared with
F e b ./5 2 M a r.,’ 51
+ 4%
+
3%
+ 6
- 0— 1
+117
+

5%

+

5%

M ar.,
1952
30,217
76,000
15,075
121,892

+

+ 19%

4%

STOCK

YARDS

Shipments
M arch, 1952
compared with
F e b .,*52 M a r .,’ 51
+ 1 %
— 10
— 4
-

+ 45%
+
9
+1J3
+

24%