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May, 1953 S o u r c e s OF a n d EIGHTH Number 5 Volume X X X V U s e s DISTRICT FUNDS IN 1952 A DISTRICT PRODUCT of almost $18 billion was associated with a record flow of district funds in 1952. Increases in household income and instalment credit were important in sustaining an active consumer demand. Funds set aside as business reserves and obtained from new security issues surpassed 1951 and financed capital expansion of dis trict industry. Heavier tax collections and increased borrowing supported larger government outlays. Growth in credit demand was met by the commercial banking system, institutional investors, and other lenders. Increases were most notable in consumer credit and new security issues. Personal savings supplied a large share of the total credit demand, and bank credit expansion was moderate. The central location of the district accounts for a very large flow of funds back and forth across district lines. On balance, consumers spent a sizable share of their receipts outside the district, with a compensatory net inflow of funds on busi ness and Government account. This net inflow was an important factor in the reserve position of the district banks. F e d e r e s e r v e ^ \ B a n k . o f St. L o u is A district product of almost $18 billion PERSONAL $ $ $ $ $ ^» do t t B U SIN ESS $ $ $ $ $$$ W W W W D ISTRICT PRO D U CT T \ ISTRIC T PRODUCERS contributed a record total of almost $18 billion to the gross national product in 1952. This record output of district goods and services was made in response to large increases in consumer and Government demand. A more moderate growth over the preceding year char acterized business investment and “ foreign” demand. Expenditures for consumer goods accounted, as usual, for the largest share in the final demand for district output. Nondurable goods, such as food and apparel, were purchased in the sum of about $5 billion. Consumer expenditures for services topped $3 billion, and outlays for durable goods, such as appliances and automobiles, accounted for another $2 billion. Investment expenditures, including residential construction, approached $3 billion. District farms and industry added more than $1 billion gross to their capital equipment, and another $600 million were spent on business construction. Changes in inventories, in contrast with 1951, were minor. The value of farmers7 livestock inventories declined while that of crops held in storage increased. Trade inventories showed a moderate advance, while manufacturers increased their goods in process. Government expenditures rose sharply to $4 bil lion, primarily under the impetus of the national security program. State and local government out lays continued the steady advance shown since the end of W orld W ar II, with large capital outlays for the construction of highways and schools. District farms and industry export a large part of their production to the rest of the country. This “ foreign” demand added another $1 billion to the district gross product. “ Foreign” demand is deThis report extends and brings up to date the sources-and-uses analysis o f money payments in the Eighth Federal Reserve Dis trict presented initially in this Monthly Review a year ago. It provides estimates o f transactions among major transactor groups. Page 50 . . . $ $18 Billion 1 termined by the net exports of district goods and services to the rest of the nation as well as for eign countries; it measures the extent to which district exports exceed district imports. The rela tively large size of this export surplus is partly due to the fact that it does not measure the “ invisible” imports bought by district residents outside the dis trict; claims of district exporters against the “ rest of the world” are offset to a considerable extent not only by the “ visible” import of goods and services into the district but also by expenditures of district residents beyond the district line. Throughout the remainder of this article, the term “ foreign” is used to indicate any transaction where one of the two parties resides beyond the district line, whether in other parts of this country or abroad. This unusual terminology serves to emphasize the vital and all-pervasive importance of the interdistrict flow of commodities and funds; it obviously does not wish to question the benefits residents of the Eighth Federal Reserve District, in common with the people in the rest of the United States, derive from living in a vast free trade area. D IS T R IC T FUNDS This record district output was, of course, greatly exceeded by the total flow of money payments in the district during 1952. This total flow includes, in addition to many other types of payments, those made by ultimate consumers for finished goods and services. Payments made by four major groups of ultimate consumers are usually distinguished: household consumers, business investors, govern ment agencies, and the “ rest of the world.” In ad dition to these payments, a very large number of transactions takes place daily in our economy to support the productive process through intermediate stages of activity before goods and services reach the ultimate consumer. Just as the final output in real terms, in actual commodity and service flows, is supported by a great number of preliminary inter industry transactions, illustrated by the movement . . . was associated with a record flow of district funds in 1952. THESE TRANSACTORS Billions RECEIVED of AND SPENT Dollars $ 2 6 Billion IN THE FORM OF US ES SOURCES Billions of Dol l ars Billions of Dollars CURRENT CURRENT IN CO M E CONSUMPTION TRANSFER TRANSFER R E C E IP T S PAYMENTS L I Q U I D A T I ON C A PITA L OF OUT L AYS ASSETS NONBANK TAXES BORROWIN< BANK FIN A N C IAL C R ED IT USES $ 2 6 Billion $ 2 6 Billion Page 51 of raw materials from the farmer through the different stages of processing until they finally ap pear as finished goods on the shelves of the retailer, so there is behind each payment for final consumer goods a large number of “ gross” money flows among different transactors participating in the several stages of the productive process which make pos sible the ultimate payment. The total number of transactions in the economy is thus always very much larger than the payments which appear in the consolidated income and product accounts. Some of these additional transactions are shown above in the chart on page 51. This chart groups the flow of district funds by major types of transactors as well as by major groups of transactions. Households, business firms, and government units are the major sectors into which the transactors have been grouped. Current income and expenditure, liquidation of assets and capital outlays, borrowing and the acquisition of financial claims, transfer receipts and payments are the major transactions.1 SOURCES OF FUNDS District households increased their current in come, including transfer receipts, by about 6 per cent. Because of the rise in personal taxes, the 1 The fourth transaction category, transfer receipts or payments, com prises all transfers of money for which no services are rendered currently and which have not been specifically classified elsewhere. This is a broader concept than used in national income accounting where money income receipts of individuals from government and business, such as pensions for veterans or retired workers, are usually classified in this category. A s used here the concept of transfer receipts and payments is much broader as it includes transactions other than net income pay ments. The size of total transfer payments depends on the number of sectors and the detail shown for the flow of funds am ong different trans actor groups. Transactor accounts are essentially— to use an accounting term— consolidated statements. Transactions within each sector are netted out. Thus the greater the number of transactor accounts, the greater the volume of transactions which were formerly lost by consolidation. For the purposes of this article, fiscal equalization payments am ong Federal, state, and local governments, as well as withdrawals of proprietors from business to household account, are shown separately, in addition to other business and government transfer payments to individuals. Transfer receipts and payments, therefore, account for a sizable share of the total transac tions shown in the chart on page 51. Current income from productive activity— another transaction category— is the m ost important source of funds for m ost transactors. In the case of households, paychecks received for current employment typify this transaction; in the case of business, net profits from current operations take its p lace; in the case of government, current tax collections illustrate government “ income.” Liquidation of assets is another source of funds. For households, the trade-in value received for the old car provides additional fu n d s; for busi ness, funds set aside for depreciation and other reserves are sources of internal financing; for government, the sale of surplus property would be an example of this type of transaction. Credit is another source of funds, extended to all groups of transactors in the anticipation of their future income. N et additions to borrowing, though quantitatively a small item among the total sources o f funds, play a strategic role in adding to the total expenditure stream. T o the extent that credit supplements the funds of individual transactors supplied out of current income, it may greatly facilitate capital outlays for economic development. Households borrow to facilitate payment for new durable goods and homes. Business firms borrow to carry inventories and to add to capital equipment. Governments borrow to supplement current tax in come for budget expenditures on current and capital account. Page 52 advance in disposable personal income was some what less, about 5 per cent. This advance more than matched the combined effect of increases in con sumer prices and population, so that real disposable income per capita— despite the heavier tax burden occasioned by the defense program— was somewhat higher in 1952 than in the previous year. In addition to current income, the sale of capital assets, primarily homes and cars, provided an im portant share of total household funds. Increased activity in the automobile and housing markets en couraged this type of financing consumer expendi tures for durable goods. Another important source of funds for the pur chase of durable goods was the expansion of instal ment credit. After the suspension of Regulation W in May, 1952, consumer borrowing rose sharply at a rate about five times above the previous year. The ratio of outstanding district consumer instalment credit to expenditures for durable goods was back to its prewar level at the end of 1952. Total consumer demand in the Eighth Federal Reserve District expanded somewhat ahead of the developments in the rest of the nation. Residential construction advanced 9 per cent over 1951 com pared with a national i nc r eas e of 7 per cent. Similarly, there are indications that purchases of durable goods here were slightly ahead of the nation. The new capital requirements of district business in 1952 amounted to more than $1 billion. As in the past, business depended on internal funds for a major share of its financing needs. Though profits after taxes were below 1951 in many lines, retained earnings as well as charges for depreciation were large and permitted continued internal financing. In the field of external financing, new security issues provided the largest net addition to business funds. In contrast to the preceding year, when working capital needs and short-run financing pres sures played a large role, 1952 was characterized by a major emphasis on long-range capital pro grams which required long-term funds. Nationally, over $8 billion of new money was raised through the issue of bonds and stocks in 1952, far above any other year on record. While inventories showed a minor increase in most lines and actual decreases in some, plant and equipment outlays of district industry proceeded at an accelerated pace. A sizable part of new plant and equipment expenditures during 1952 received certain amortization privileges for tax purposes. Certificates of necessity, authorizing these rapid Increases in household income and instalment credit . . . SOURCES OF HOUSEHOLD FUNDS, 1952 PERCENT INCREASE FROM 1951 -1952 «P 1 W d fr HOUSEHOLD INCOME $ TRANSFER RECEIPTS LIQUIDATION OF ASSETS $ 14.5 Billion . . . were important in sustaining an active consumer demand. USES OF HOUSEHOLD FUNDS, 1952 PERCENT INCREASE FROM 1951- 1952 FINANCIAL USES $ 14.5 Billion Page 53 Funds set aside as business reserves and obtained from new security issues sur passed 1951. . . SOURCES OF CORPORATE FUNDS,1952 $ PERCENT INCREASE FROM 1951-1952 <■ * • io % NET I NC OME RESERVES NEW SECURITY ISSUES - < k 22% OTHER $ 3 Billion . . and financed capital expansion of district industry. USES OF CORPORATE FUNDS, 1952 PERCENT INCREASE FROM 1951-1952 C A PITA L OUTLAYS TAXES TRANSFER PAYMENTS FINANCIAL USES $ 3 Billion Page 54 Heavier tax collections and increased borrowing SOURCES OF GOVT FUNDS, 1952 . . . PERCENT INCREASE FROM 1951-1952 $ 5 . 5 Billion . . . supported larger government outlays. USES OF GOV'T FUNDS IN 1952 PERCENT INCREASES FROM 1951-1952 TRANSFER PAYMENTS $5.5 Billion write-offs, have been issued since the Korean out break through 1952 for facilities in this district costing over $1 billion. In addition to this defenseconnected capital expansion, on the part of district industry, many new facilities for the production of civilian goods and services were added last year. And in district agriculture, farm mechanization continued. Page 55 Government income was up sharply as a result of heavier tax collections. Borrowing increased on all levels of governmental activity, for the Federal Government as well as state and local units. . . . was met by the commercial banking system9 institutional investors and other lenders. Purchases of goods and services by Federal, state, and local governments rose from $3.2 billion in 1951 to $3.8 billion in 1952— primarily under the con tinuing impetus of national security expenditures. A larger volume of construction on Federal account resulted from work on new defense plants, military and naval bases, and the atomic energy plant near Paducah, Kentucky. In line with the expansion of the uranium separation plant, public utilities and T V A stepped up their construction activities. State and local governments spent $1.2 billion, much of it for additions to capital plant and equip ment, such as new highways, schools, and hospitals. The bulk of such capital expenditures has been financed out of borrowed funds rather than current revenues. CREDIT DEM ANDS Growth in credit demand . • . BUSINESS HOUSEHOLDS # GO VERN EN M T « $ 2 Billion The expansion in district output would not have been possible without the availability of credit to the transactor groups. Business and consumers extended their borrowing throughout 1952 to help finance their working capital needs as well as large expenditures for plant and equipment, housing and durable consumer goods. Business credit demands for seasonal purposes also increased in the last half of the year. Government borrowing to finance capital improvements and to extend the defense program added further to the demand for credit. Page 56 $ 2 Billion To a considerable extent, these credit demands were supplied by commercial banks. In the aggre gate district banks added about $500 million to their loans and investments in 1952 to show about the same percentage growth in bank credit as the national rate. Nationally the expansion centered somewhat more in loans to business than was true in the district where such loans declined year-end to year-end, reflecting a moderate contraction of commodity inventory financing. In both district and nation, bank lending to consumers increased substantially. Credit needs of the district and national economies were also supplied by institutional investors. Over the years life and other insurance companies, private pension funds, savings and loan associations, non profit organizations, and various other non-banking financial institutions have made increasing volumes of credit available to borrowers, particularly in the longer-term credit area. In 1952 these institutional investors supplied a large volume of funds to house holds in the form of real estate loans and to business by purchase of corporate securities. Over the year, their holdings of Federal Government oligations declined. Notwithstanding the growing importance of insti tutional lending, the largest aggregate of credit was extended by lenders other than district financial institutions. Business firms extended trade credit to their customers, governmental units extended credit to their suppliers, households bought cor porate and Government securities, and, of particular significance in Eighth District analysis, lenders from outside the district made funds available to district residents. T he total funds made available to district transactors billion in 1952. in this way surpassed $1 Personal savings supplied a large share o f the total credit demand, . . . OTHER FIN A N C IA L ASSETS Increases were most notable in consum er credit and new security issues. CORPORATE SE C U R ITIE S a SAVINGS LOAN SHARES CURRENCY a O E P O S ITS IN SU R A N C E P REM IUM S A n increased proportion of the total credit demand M ORTGAGES CO RPO RATE S E C U R IT IE S GOVERNMENT OBLIGATION S CONSUMER CRED IT was supplied from savings accumulated by indi viduals. Financial assets of individuals expanded greatly through deposits in demand and savings A m o n g the different types of credit, increases accounts at commercial banks, additions to shares in savings and loan associations, and growth in life over 1951 were m ost outstanding in the field of consumer credit. Consumer borrowing rose sharply insurance reserves. follow ing the suspension of the consumer instalment was used to finance capital expenditures by busi This increased volume of per sonal savings accumulated at financial institutions credit regulation on M ay 7, 1952. W ith credit terms nesses and consumers, with a large amount of credit eased considerably, more durable goods purchases granted to business for plant and equipment outlays. have been financed on credit, and more credit has been granted on individual purchases. T otal con chases of corporate and Government securities. In addition, individuals increased their direct pur sumer credit in the district expanded by 25 per cent, T w o types of personal savings were evident. One five times the rate of the preceding year. group of savers accumulated their savings in liquid Dem ands for long-term credit increased sharply forms, put to work either by financial intermediaries in 1952 and the capital markets supplied an excep or by the direct purchase of corporate and Govern tionally large volume of funds during the year. Flotation of corporate securities increased by nearly ment securities. two-fifths over 1951, and m oney raised through the of current income and partly by borrowing. In the issue of bonds and stocks reached an all-tim e high. A higher level of business expenditures for new take the form of consumer debt repayment. T he other group acquired fixed assets, homes and appliances, financed partly out latter case, future personal savings are likely to plant and equipment, a marked decline in corporate funds retained from operations (partly offset, how ever, by a lessened demand for working capital), and the funding of debt owr ed to commercial banks, all contributed to an increased corporate demand for • • • and bank credit expansion was m oderate. OTHER IN V E S T M E N T S long-term financing, both debt and equity. T hrough out m ost of the postwar period, public utility com panies were important users of the new-securities markets. Since the start of the present defense build-up, manufacturing U. S. G O V E R N M E N T SE CU R ITIE S have also stepped up their security sales substantially. T he principal issuers in corporations 1952 were in chemical, ma chinery, petroleum, and steel industries where facili ties are being expanded in accordance with defense program objectives of increasing productive capacity for strategic materials and specialized equipment. T h e growth in personal savings made it possible to meet a large part of the credit demands by chanPage 57 neling liquid savings of individuals through finan cial intermediaries into business investment rather than by creating new bank funds. A corresponding ly smaller part of district credit demand was sup plied by expanding earning assets of the commer cial banking system beyond the increase provided by growth in time deposits and capital accounts. T o put it another way, total loans rose about 5 per cent at district member banks, and investments were increased 6 per cent during 1952. Nationally about the same growth took place. Thus, districtwise and nationally, there was an increase in the total money supply, but a large share of this increase took the form of relatively inactive time deposits. The increase in demand deposits and currency— active elements in the money supply-— amounted to 4 per cent and was less than in the previous year. F L O W OF FUNDS T h e ce n tr a l lo c a tio n o f t h e d is tr ict a c c o u n ts f o r a v e r y la r g e flo w o f fu n d s ba ck a n d fo r t h a cr o s s d is tr ict lin e s . The Eighth District is centrally located. There are no artificial barriers to trade or the flow of payments or the movement of people between this district and the rest of the nation. District residents are engaged daily in a great many transactions that reach across district lines. These transactions in turn depend on a vast amount of money payments among resident and “ foreign” transactors (those outside the district). The $30 billion in payments out of the district and the more than $30 billion in payments into the district that were recorded dur ing the year in the System's Interdistrict Settle ment Fund are impressive evidence of the impor tance of interdistrict money flows. Though the gross amount of inflowing and out flowing funds in any Federal Reserve District is very large, the net flow of funds after clearance through the Interdistrict Settlement Fund is rela tively small. In effect, exports of district goods Page 58 and services pay for imports by providing the off setting claims against other districts. The net balance remaining for settlement reflects the creditor or debtor position of the district economy on current and capital account as well as financial transactions, such as open market operations of the several Federal Reserve Banks on system account. The latter, however, will cancel out over the longer run when the more permanent relation of the district to the national economy will be indicated by the more persistent trends in the net flow of interdistrict settlement funds. Their origin and meaning may be further analyzed in terms of interdistrict com modity flows, as was done in the June, 1952, Monthly Review, or in terms of the relations among major transactor groups, as is done in the present statement on sources and uses of district funds. O n b a la n ce9 c o n s u m e r s s p e n t a siz a b le s h a r e o f th e ir r e c e i p t s o u ts id e t h e d is tr ic t , w ith a c o m p e n s a t o r y n e t in flo w o f fu n d s o n b u s in ess a n d G o v ern m en t a c c o u n t . $ * $ 100 MILLION The Eighth District has a net outflow on personal income and product account substantially larger than that shown for the United States as a whole. The corresponding national net outflow of funds on personal account indicates the extent to which Americans as individuals buy foreign goods and services, send remittances to friends and relatives in other countries, or travel abroad more than their counterparts abroad spend here. Similarly, a larger district net outflow on personal account measures net expenditures of district income recipients outside the district. Partly, this net loss of funds on personal account reflects the importance of some large trade centers just beyond the district 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 vacationing “ abroad.” Partly, it reflects the general tendency of less urbanized areas to buy professional and financial services in the larger metropolitan centers of the nation, such as Chicago and New York. The net outflow of district funds on personal account was more than offset by a net inflow on business and government account. The net exports of district business firms, which have been noted above as components of the dis trict product, provided a sizable inflow of funds on current account. In addition, many of the capital expenditures in the Eighth Federal Reserve Dis trict were financed with funds raised outside the district, accounting for a net inflow on capital account. In the case of internal financing, national corporations may transfer depreciation and other business reserves accumulated from operations else where to build new branch plants in the district. In the case of external financing, “ foreign” lenders may provide part of the borrowed funds. Business capital expenditures exceeded funds raised within the district to a sizable extent. Fiscal operations usually lead to some equaliza tion among high and low income areas. As the Eighth Federal Reserve District is a region of rela tively low income, Federal payments are propor tionately larger than tax collections. These pay ments are either for direct purchases of goods and services or take the form of transfer payments. In the latter case, they may be grants to state and local government units for highway construction and other governmental operations or direct income transfers to district residents for veterans’ benefits and other transfer receipts in the district household account. In a d d i t i o n to these g o v e r n m e n t payments on current a c c o u n t , large capital expenditures have been made in connection with the national security program. T o the extent that these expendi tures are financed by funds raised outside the dis trict, a net inflow on government capital account may result. This same consideration applies to funds borrowed from “ foreign” lenders by state and local governments of the district. This net inflow was an important factor in the reserve position o f the district banks. INCREASING ----------- ,----------- IN T E R D IS T R IC T FLOW OF FUNDS CURRENCY IN C IR C U LA TIO N TREASURY OPER ATION S M IS C E L L A N E O U S CHANGE IN BORROWINGS (M illion t DU e ers) ■ CHANGE IN FACTO RS R E Q U IR E D FROM EXCESS RESERVES FEDERAL RESERVE RESERVES The net flow of funds across district lines had an important influence on the reserve positions of the district banks. Just as nationally the reserves of commercial banks are eased by a net inflow of gold and foreign funds, so is the reserve position of banks in any particular area eased by a net inflow of funds from outside. The above chart suggests that the 1952 reserve position of banks in the Eighth Fed eral Reserve District would have been even tighter without the relatively large net inflow of funds from other districts. It is through the net flow of funds that System open market operations and gold movements affect district bank reserves and distribute the over-all effects of national monetary policy among the dif ferent regions of the country. The present analysis suggests that district net inflows are largely due to business and government capital expenditures financed partly with outside funds. It has been the traditional characteristic of areas in the process of rapid economic development to show a net inflow on capital account. The strategic task of the dis trict banks is to administer these credit funds, whether they originate inside or outside the dis trict, so as to assure their maximum contribution to regional and national economic growth. W erner H o ch w ald Page 59 Survey of Current Conditions E R -A L BUSINESS A C Y the O YEighthLDistrict during MarchT IV ITearlyinApril and continued its upward trend. Consumer spending advanced more than seasonally during March, and was substantially ahead of year-earlier levels. Em ployment in plants producing defense goods con tinued to increase during March, and, except in Evansville, expectations were for some further gains. Manufacturing employment in other indus tries, primarily those producing consumer durable goods, expanded sharply during the month. Con struction put in place in the first quarter continued at a high level as a result of large contracts placed in earlier months. Residential contract awards were above year-ago volumes, although other types fell below and failed to keep pace with national experi ence. Bank lending activity in the district during March and April increased as a result of expansion of consumer loans and advances to farmers. Busi ness loans declined less-than-seasonally. And agri cultural conditions in the district were generally favorable. There have been, however, a few unfavor able developments recently. For example, used car sales failed to show their seasonal increase in early April, unseasonable weather adversely affected de partment store sales, defense production was cut back in Evansville, and the freezing weather damaged some fruit crops. Nationally, industrial production continued to rise during March, but in April work stoppages reduced slightly the output of steel. The Federal Reserve index of industrial production reached 242 per cent of the 1935-39 average in March, nearly 1 per cent higher than in February and 9.5 per cent greater than in March, 1952. The increase from February reflected mainly greater activity in the metals and metal products industries. During the first quarter, industrial output was 2.5 per cent greater than in the final quarter of 1952. Consumer spending in the first three months, on a seasonally adjusted basis, increased from the final quarter of 1952. The high level of personal expenditures stemmed from the steady flow of per sonal income, consumers’ willingness to spend and their ability to finance an expanding share of their purchases. Personal income after taxes in the first quarter rose one per cent from the last quarter of Page 60 1952. Consumer credit, too, expanded substantially in the first quarter, reaching a total of about $26 billion as March closed. Total demand has been augmented also by the increase in capital formation. Business spending for new plant and equipment increased slightly in the first quarter, as did the value of residential construc tion put in place. The record-breaking output from the nation’s factories has been well absorbed. Business inven tories in the first quarter rose at an annual rate of $2.5 billion, substantially less than the $8.1 billion annual rate in the previous quarter when stocks were being rebuilt following the steel strike. In ventories at durable goods retail stores accounted for much of the increase this year, while those at nondurable goods stores, manufacturers and whole salers showed little change. In fact, manufacturers’ stocks of steel are currently below the level desired for the present volume of activity. Further evidence of the balance in the economy was shown by the stability of price indexes in the period. Consumer prices rose slightly from midFebruary to mid-March and were one per cent higher than in March, 1952. Wholesale and spot market prices, which had firmed in the month ended mid-March declined slightly through mid-April. Spot prices of metals in the primary markets weakened in the period, W H O L E S A L E P R IC E S IN TH E U N ITE D S T A T E S Bureau of Labor Statistics (1947.49 = 100) A ll Commodities.... Farm Products... Foods...................... O ther...................... M a r .,’ 53 110.1 1 0 0 .0 105.0 113.4 F e b .,’ 53 109.6 97.9 105.1 113.1 M a r.,’ 52 112.3 108.3 109.2 113.9 M a r., 1953 compared with F e b .,*53 M a r.,’ 52 - 0 - % — 2% + 2 — 8 - 0 — 4 - 0 — 1 C O N S U M E R PR IC E IN DEX* Bureau of Labor (1947-49S 1 0 0 ) = Mar.* 1953 1953' 113.6 114.7 D ec., 1952 195 2 ' 114.1 114.9 M ar., 1952 1952 ' 112.4 114.0 M ar., 1953 compared with M a r.,’ 52 ]Dec.,’ 52 — 1% -0 - "+ 1% ~ +1 R E T A IL FO O D * Bureau of Labor Statistics (1947-49 = 100) * N ew series. M ar., 1953 111.7 112.4 Feb., 1953 M ar., 1952 111.5 112.7 113.9 1 1 2 .8 M a r., 1953 compared with F e b .,’ 53 M a r.,’ 52 -0-% — 1% - — 0 - 1 reflecting in part the adjustment to price develop ments in foreign markets. Cattle prices, too, de clined further under the pressure of large market ings. H og prices, however, strengthened slightly. The main question marks on the near-term busness horizon center around the ability and willing ness of consumers to continue to absorb the record outputs flowing from the nation’s factories and the future demands for defense production. Concern over consumer demand arises from the rapid growth over the past year in personal debt to finance dura ble purchases and homes. The second question arises from the possibility of improvement in inter national relations and the effects such a develop ment would have on defense spending. E mpl oyme nt Employment continued upward in March with the usual spring upswing in construction and agri culture and the pre-Easter spurt in retail trade. Civilian employment in the nation reached 61.5 million in March, about half a million more than in February. During the first quarter, total employ ment progressively widened its gains over yearearlier levels and in March was 1-^4 million more than in March, 1952. Nonfarm employment in creased slightly from February to a record high for the month of 55.7 million, 2 million more than in March, 1952. Agricultural employment rose sea sonally to 5.7 million in March, but continued below the level a year earlier. W ith employment at a higher level this year than last, and with the labor supply only slightly larger, unemployment continued below the level of a year earlier. Only 1.7 million persons, or 2.7 per cent of all civilian workers, were jobless in March compared with 1.8 million, or 2.9 per cent, in March, 1952. In the district, unemployment continued to de cline in March and early April. Claims for unem ployment insurance filed under the programs of the seven district states in the week ended April 11 totaled 139,000, compared with 152,000 claims filed four weeks earlier and 174,000 a year earlier. The change from both a month earlier and a year earlier in unemployment claimed in the district states was comparable to national experience. In the St. Louis metropolitan area, nonfarm em ployment advanced from February to March as a result of greater manufacturing activity and sea sonal expansions in construction and retail trade. Compared with a year ago, March volume was about 3.5 per cent ahead. Most of the increase in the month and in the year resulted from greater manufacturing employment, with smaller increases in construction and retail trade, offset in part by lower employment in government service. From February to March, automobile assembly plants added about 1,300 workers, and aircraft plants con tinued to expand. Shoe plants, however, laid off workers due to a seasonal slowing of production. In comparison with March, 1952, transportation equipment manufacturing (including automobile assembly and aircraft) plants increased employ ment by approximately 11,000, ordnance plants by approximately 5,000 and other plants producing durable goods by about 8,000. Manufacturing plants producing nondurable goods employed about the same number as a year earlier. Reductions at shoe factories and food processing plants offset increases at apparel and chemical plants and petroleum refin eries. Employment at other nondurable goods plants was little changed. In Louisville metropolitan area, employment in nonagricultural establishments increased by 3,000, or 1.4 per cent, from February to March, and by approximately 16,000, or 7.5 per cent, in the year. The gain from February was largely the result of seasonal increases in retail trade and construction, and expansion of defense production of explosives and ordnance. In addition, employments in distilled liquor and woodworking plants rose slightly from February. In comparison with year-earlier levels, employment at whiskey plants was lower while em ployment in other manufacturing industries was higher, with the largest gains in ordnance, chemical (including explosives), machinery and transporta tion equipment plants. Construction employment was about 5,000, or 50 per cent, ahead of March, 1952. In the Little Rock metropolitan area, nonfarm employment increased seasonally from February reflecting primarily gains at retail trade establish ments. In comparison with March, 1952, the gain was 2,500, or 3.7 per cent, as a result of large gains at metalworking m a n u f a c t u r i n g establishments, where there was increased defense production, and widespread increases in nonmanufacturing establishments. In the Evansville area, nonfarm employment in creased 1,300 from February to March when it was 13,800, or 21 per cent, higher than a year earlier. Nearly all of the gain from a year earlier resulted from rising manufacturing activity in the auto mobile, refrigerator and aircraft industries. From February to March, the biggest employment gain was in refrigerator production, which was in the Page 61 seasonally busy period. In early April, 1,200 workers were laid off from the production of air craft wings. slack period was entered. Crude oil production was off a shade as oil stocks were reported above normal levels. Industry Co n s t r u c t i o n Industrial production in the Eighth District in March and early April remained at near capacity with most industries still operating above year-ago levels. The bulk of the recent increase in manu facturing activity has been in consumer durable goods and defense output. Manufacturing—The use of electric power at selected industrial firms in six district cities for the month of March was 4 per cent better than a year ago, although showing a 3 per cent decline from a month earlier, on a daily average basis. The decline over the month reflected primarily reduced use of power at rubber products and cottonseed oil plants. On the other hand, there were substantial increases in the use of power by the chemical, electrical ma chinery, paper and allied products, primary metals, stone-clay-glass and transportation equipment in dustries. Almost all industries showed gains com pared with March, 1952. A record total of $7 billion was spent for new con struction put in place in the nation during the first quarter of the year, a 6 per cent increase over the first quarter in 1952. In rounding out the quarter, March figures hit an all-time peak, seasonally ad justed, 3 per cent above those of February. Private construction rose more than seasonally to account for the larger part of the over-all gain. Public con struction outlays rose 12 per cent, but this was somewhat less than usual at this time of year. Construction contracts awarded also increased substantially over comparable periods last year. The F. W . Dodge Corporation reported an 11 per cent gain for the first quarter and a 2 per cent gain for March. These increases were achieved despite the Coal and petroleum— Coal output declined at a slower rate than earlier this year as the seasonally M ar., 1952 K .W . H . 813 166 4,017 1,542 459 5,039 12,036 M ar., 1953 compared with F e b .,>53 M ar.,»52 — 3% +19% — 20 + 2 — 9 — 4 — 3 + 3 + 4 4* 5 + 1 + 7 — 3% + 4% L O A D S IN T E R C H A N G E D FO R 2 5 R A IL R O A P S A T S T . L O U IS M a r.,*53 F e b .,’ 53 107,130 First Nine D ays M a y ,’ 53 M a y ,’ 52 M a r.,’ 52 121,107 109.154 Source: 34,308 33,351 3 mos. *53 337,727 3 m os. ’ 52 3 3 2 ,5 2 2 ' Terminal Railroad Association of St. Louis. C R U D E O IL P R O D U C T IO N D aily Average (I n thousands of bbls.) .... ,,,, T otal.......................... M ar., 1953 77.4 164.5 M ar., 1952 76.5 165.1 30.3 35.4 307.3 Feb., 1953 77.7 165.8 34.0 29.8 307.3 305.3 M ar., 1953 compared with F e b .,*53 M a r .,*52 1 Freight interchanges of railroads in the St. Louis area were 13 per cent above February and 11 per cent above March of a year earlier. D aily Averages * M ar., Feb., ( K . W .H . 1953 1953 in thous.) K .W . H . K .W . H . 969 998 Evansville............. 170 211 Little R ock........... Louisville............... 3,872 4,241 1,582 1,620 M em phis................ Pine B lu ff............. 481 464 St. Louis...... ......... 5,404 5,370 Totals................. 12,477 12,904 * Selected Manufacturing Firms. I o Shoe production entered a seasonally slack period in April, after the first quarter production had set records well ahead of a year ago according to many manufacturers in the district. Nationally, produc tion was estimated by the Tanners' Council at 136.8 million pairs, 7 per cent above last year, for the largest quarter on record. Steel ingot production in the St. Louis area was at only 76 per cent of capacity for the first three weeks of April, primarily reflecting maintenance shutdowns. Southern pine lumber output in March registered a 4 per cent gain over February, though the operating rate of south ern hardwoods was 6 per cent lower. Both were better than a year ago. Livestock slaughter under Federal inspection in the district was much heavier in March than in February. Figures for eight livestock marketing centers in the district show that the increase amounted to 28 per cent over February and 5 per cent over March a year ago.1 C O N S U M P T IO N O F E L E C T R IC IT Y — - 0 — — 1 1 1% + 1% - 0 + 12 — 16 — 1% C O A L P R O D U C T IO N IN D EX 1 9 3 5 -3 9 = 100 _________ M ar., ’ 53 Unadjusted Feb., ’ 53 127.5 P 139.3 P __________ M ar., ’ 52 134.8 ______________ Adjusted_______________ M ar., ’ 53 F eb., *53 M a r., ’ 52 134.2 P 122.2 P 141.9 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 1 Beginning: this month, figures are available for eight livestock marketing centers in the district by special arrangement with the United States D epart ment of Agriculture. Th e figures are reported as combined totals in three oups as follo w s: ( 1 ) Evansville, Ind ian a; Henderson and Louisville, entucky; ( 2 ) St. Louis Metropolitan A r e a ; (3 ) Memphis and Union City, Tennessee; W e s t Point, M ississippi; W ilso n , Arkansas. f Page 62 Feb., ’ 53 173.7 Unadjusted Jan., ’ 53 169.9 Feb., ’ 52 144.2 F eb., *53 163.9 Adjusted Jan., ’ 53 166.6 F e b ., *52 136.0 B U IL D IN G PER M ITS M onth of M arch, 1953 ______ N ew Construction______ _______ Repairs, etc.______ (C o st in N um ber Cost thousands) 1953 1952 1953 1952 Evansville.............. 105 74 $ 207 $ 515 Little R ock......... 70 46 483 371 Louisville.............. 158 167 1,422 733 M em phis................ 1,557 1,863 10,007* 5,426 St. L o u is....,.......... 299 265 2,710 3,102 N um ber Cost 1953 1952 1953 1952 105 93 $ 117 $ 75 172 190 149 126 122 108 242 142 195 235 123 194 289 219 645 564 M ar. T o ta ls.......... 2,189 2,415 $14,829 $10,147 883 Feb. T o ta ls.......... 1,804 1,914 $ 7,551 $ 5,739 759 * H ousing Project and an addition to H ospital. 845 $1,276 $ 1 ,1 0 1 669 $1,156 $ 983 fact that Federal awards were reduced in February and March by restrictions on letting new contracts. The big gains have been in the field of private construction. New housing starts in the nation during the first quarter were at a seasonally adjusted rate of 1,164,000, slightly less than in the first three months of last year. The decline was largely due to a 7 per cent decrease from a year earlier in March. Construction awarded in the Eighth District dur ing March totaled $79 million, an increase of 40 per cent from February, compared with a 32 per cent gain for the 37 eastern states. However, for the first three months of the year contracts awarded in Depar t ment Store Sal es in the district declined 10 per cent compared with last year, while they gained 11 per cent in the states east of the Rocky Mountains. The district decline reflected a 28 per cent drop in the value of nonresidential awards over the period, which more than offset a 15 per cent gain in residential awards. After six months of relative stability, construc tion costs rose slightly, reflecting increases in ma terials prices. Trade During March, consumer spending in the Eighth District increased more than seasonally from Feb ruary and was somewhat higher than in March, 1952. Gains were recorded in both durable and nondurable lines. Furniture and appliance sales were good, but much of the gain from last year was concentrated in a few lines of merchandise. Auto sales also increased during March, although for used cars and some new car lines less than seasonal gains were reported. Used car inventories have increased recently and prices have declined. Nondurable goods sales in March were stimu lated by mild weather and a week-earlier Easter Evansvi l l e and the Uni t ed St at es Per Cent of 1947-1949 Average n in d e x of departm ent store sales A in Evansville on a monthly basis is now available for the period 1940 to date. Both unadjusted and sea sonally adjusted indexes of daily average sales have been compiled using the 1947-49 averages as the base period. Seasonally adjusted sales are charted above showing department store sales in Evansville since mid-1950. A description of the technique employed in constructing the index and back data from 1940 to date can be obtained from the Research Department of this bank upon request. Page 63 W H O LE SA LE TRADE Line of Commodities N et Sales_______ D ata furnished by M ar., 1953 Bureau of Census, compared with U . S. Dept, of Commerce * F e b .,*53 M a r.,*52 Autom otive Supplies.................... + 1 3 % + 9 % D rugs and Chemicals................... — 3 - 0 D ry Goods......................................... + 1 3 +20 Groceries............................................ + 1 8 + 7 Hardware........................................... + 9 + 4 + 1 Tobacco and its Products.......... — 4 Miscellaneous.................................. + 1 5 +20 ** Total A ll L in es.................... + 9 % + 9% * Preliminary. ** Includes certain items not listed above. DEPARTMENT STO R ES Stocks M ar. 31, 1953 compared with M ar. 31, 1952 + 7% + 5 + 2 — 11 + 16 + 5 this year than last year. At district department stores, sales gains were fairly widely distributed throughout major store divisions. But the bulk of the gain occurred in ready-to-wear apparel and accessories. At specialty stores, the spring selling season boosted March sales substantially over those of both the previous month and March, 1952. Seasonally adjusted daily average sales of dis trict department stores in March were 107 per cent of the 1947-49 period. In comparison, they were 106 per cent in February and 99 per cent in March, 1952. For the first three months of 1953, cumulative sales totaled 6 per cent above those in the first quarter of 1952. On the basis of preliminary reports through mid-April, this rate of gain may be main tained in the month. Unseasonally cold weather experienced during April this year, however, may have limited the effectiveness of seasonal promo tions to the extent that the March-April spring selling season will prove to have fallen below the anticipated level. W om en’s specialty store sales in the month were substantially over those in February and were 12 per cent larger than in 1952. Men’s apparel store sales were almost one-half larger than in February and were about one-fifth larger than in March, 1952. Furniture store sales for the district as a whole were 8 per cent larger than in February and 10 per cent above those during March, 1952. Inventories held by district retailers on March 31 were generally larger than on February 28. Among the reporting lines, increases from the previous month ranged from unchanged at women’s specialty shops to 19 per cent at furniture stores. In compari son to those held on March 31, 1952, women’s spe cialty shop inventories totaled slightly less. Men’s specialty stores reported a gain of 8 per cent from last year and department and furniture stores an increase of 6 and 18 per cent respectively. At district department stores, the volume of orders outstanding at the end of March totaled 21 per cent less than a month earlier but were 16 per cent larger than a year ago. Page 64 Stocks on Stock H and Turnover M ar. 31, ’ 53 M arch, 1953 3 m os. compared Jan. 1 compared with 1953 with to Feb., M ar., to same M arch M arch 31 1953 1952 period *52 3 1 /5 2 ’ 53 ’ 52 8 th F .R . D ist. T o ta l..................+ 2 6 % + 12% + 6% + 6% .85 .84 F t. Smith, A r k .1 ...........................+ 34 + 9 + 3 -— 1 .80 .78 + 5 + 3 + 9 .77 .81 Little Rock Area, A r k .2 ..........+ 14 Q uincy, 111....................................... + 2 7 +13 + 3 + 8 .77 .81 Evansville Area, In d .2 ...............+ 37 +32 +24 .... ............... Louisville Area, K y ., In d .2....+ 35 +10 + 6 + 5 .85 .87 St. Louis Area, M o ., 111.2 ....... + 25 +13 + 6 + 4 .8 8 .85 Springfield Area, M o .2 ..............+ 4 0 +12 + 2 +14 .70 .71 Memphis Area, T enn .2 ..............+ 23 +12 + 4 + 7 .94 .92 A ll Other Cities 3 .......................... + 29 +17 +15 +12 .63 .67 N et Sales 1 In order to permit publication of figures for this city (or area), a spe cial sample has been constructed which is not confined exclusively to de partment stores. Figures for any such nondepartment stores, however, are not used in computing the district percentage changes or in computing de partment store indexes. 2 The sample for these areas is unchanged from the sample previously reported for the principal cities in these areas. 3 Fayetteville, Pine B luff, A rkansas; H arrisburg, M t. Vernon, Illinois; Vincennes, In d ian a; Danville, Hopkinsville, M ayfield, K en tu c k y ; Chillicothe, M issou ri; Greenville, M ississippi; and Jackson, Tennessee. O U T S T A N D I N G O R D E R S of reporting stores at the end of March, 1953, were 16 per cent larger than on the corresponding date a year ago. PERCENTAGE OF ACCOUNTS AND N O T E S R E C E IV A B L E Outstanding M arch 1 , 1953, collected during M arch, 1953 Instalm ent E xcl. Instal. Instalm ent E xcl. Instal. Accounts Accounts Accounts Accounts 60% Quincy .................. 20*? Fort Sm ith........... ° / 52 48 St. L ou is................ 19 Little R ock ........... 16 48 Other Cities.........12 50 Louisville ............. 21 49 8 th F .R . D ist..... 19 41 Memphis ............. 22 IN D E X E S O F D E P A R T M E N T STO R E SA LE S A N D STOCK S 8 th Federal Reserve D istrict Feb., 1953 Jan., 1953 March, 1952 85 106 M arch, 1953 ... 99 ... 107 ... 135 ... 128 79 108 113 130 89 99 118 122 125 111 4 D aily average 1 9 4 7 -4 9 = 1 0 0 5 End of M onth Average 1 9 47 -49:= 1 0 0 T R A D I N G D A Y S : March, 1953— 2 6 ; Feb., 1953— 2 4 ; March, 1952— 26. R E T A IL F U R N IT U R E N et Sales M ar. , 1953 compared with F e b .,’ 53 M a r.,’ 52 M em phis.......... Little Rock...., Springfield...... Fort Sm ith..... + 8% + 18 + 5 + 13 — 15 — 10 + 15 + 10 + + + + + — + — 10% 14 15 16 8 13 19 7 STO R ES Inventories M ar., 1953 compared with F e b .,*53 M a r .,’ 52 + 18% + 19% + 13 + 2 + 2 + 10 + 2 + 11 * * * * + * 8 + * 7 Ratio of Collections M ar., 53 M ar., i 26% 24% NA NA 15 13 13 12 12 15 22 19 17 16 * * * 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 B luff, A rkansas; Hopkinsville, Owensboro, K en tu c k y; Greenwood, M ississippi; Hannibal, M issou ri; and Evansville, Indiana. 2 Includes Louisville, K en tu ck y; and N ew Albany, Indiana. N A — N o t Available. PERCENTAGE D IS T R IB U T IO N O F F U R N IT U R E M ar., *53 Cash Sales ................................................................ Credit Sales ................................................................ Total Sales ......................................................... 16% 84 100% F eb., *53 16% 84 100% SALES M ar., ’ 52 12% 88 100% Banking and Finance tion by the banks of these dealers last fall. Loans to banks, although off, were at a relatively high level over most of the six-week period. At the same time banks were expanding their loans, they were losing deposits. Some of the drain was occasioned by a lowering of interbank accounts; and a portion was caused by payment of income taxes by depositors and subsequent calls on Tax and Loan accounts by the Treasury. To meet the drain caused by deposit withdrawals and to obtain funds for loan expansion, banks sub stantially reduced their investment portfolios, largely Treasury bills, and drew on previously ac cumulated cash assets. In addition, they maintained their borrowings at a high level, both with the Fed eral Reserve and correspondent banks, although closing the period with fewer borrowings than they had at the end of February. Bank lending activity was at a high level during March and early April. Both consumer loans and advances to farmers were up. Business loans de clined less than seasonally. Deposits, however, were off, and to obtain funds, banks reduced their cash and investment holdings. Debits to deposit accounts, one indicator of busi ness activity, were at a very high rate during March. District banking— During March and early April, Eighth District member banks increased their loans outstanding with the largest gain at rural banks where loans to farmers normally increase at this time. Consumer loans were up substantially with most district cities sharing in the gain. Advances secured by real estate and securities were virtually unchanged. Business loans, although down, did not decline as much as seasonally expected. The ex pansionary trend in business borrowing appeared to be caused largely b y: 1) greater than usual bor rowing during March to make income tax payments, 2) the continued strong demand for consumer credit which was reflected in a sharp increase in loans to sales finance companies and retail concerns, and 3) fewer net repayments from commodity dealers at Memphis due to the less than usual accommoda Debits to deposit accounts— During March, 1953, debits to individual, business, and local government accounts were about $4.6 billion, 15 per cent higher than in March a year ago. The largest increases were at Texarkana, Arkansas; Evansville, Indiana; and Jefferson City, Missouri. Turnover of deposits averaged just under 22 times (annual rate) in March. The month’s turnover rate was about 10 per cent above that for the twelve-month period ended March, 1953. EIG H TH D IST R IC T M E M B ER B A N K A S S E T S A N D LIAB ILITIES BY S E L E C T E D G R O U P S (I n Millions of D ollars) Assets __________ A11 Member____________ Change fro m : F eb., 1953 M ar., 1952 To To March, March, March, 1953 1953 1953 Loans and Investm ents.................................... $4,469 $— 73 $ + 288 a. Loans ................................................................... b. U . S. Government Obligations................ 1. 2,083 + — + 11 90 +203 + 79 + 6 — + 98 9 — + 11 — 107 — 16 + c. O ther Securities ............................................. 2. Reserves and Other Cash Balances........... a. Reserves with the F . R . B ank................ b. Other Cash Balances 3................................. 1,995 391 1,392 734 658 6 5 ______ L,arge City Banks 1________ Change fr o m : Feb., 1953 M ar., 1952 To To March, March, M arch, 1953 1953 1953 $2,587 1,393 $— 62 1 ,0 1 0 + — 3 69 184 + 4 864 474 390 — + — 59 — 7 10 5 69 + — 12 — 2 + $ + 170 + 148 + 22 - 0 - ________ Smaller Banks 2 Change fro m : M arch, 1953 $1,882 690 985 207 528 260 268 Feb., 1953 M ar., 1952 To To M arch, M arch, 1953 1953 $— + — 11 8 21 + 2 — — 39 — 38 1 $ + 118 + 55 + 57 + 6 + + — 2 + 2 6 4 3. O ther Assets ......................................................... 51 4 32 2 19 — 3 4. Total A ssets............................................................. $5,912 $— 176 $ + 287 $3,483 $— 123 $ + 165 $2,429 $— 53 $ + 122 5. Gross Dem and D eposits................................... $4,337 $ + 123 — 10 +133 + 51 $2,644 647 1,997 501 $+ — + + 55 $1,693 $— 49 686 $— 161 — 70 — 91 — 5 $— 1 12 a. Deposits of B anks................................. ....... b. Other Dem and D eposits............................ 10 65 19 39 1,654 551 — — — 3 46 $ + 68 - 0 + 68 + 32 — 5 Inabilities and Capital — 67 — 45 + 1 6. Tim e Deposits ....................................................... 3,651 1,052 7. Borrowings and Other Inabilities................ 124 — 15 + 82 112 — 14 + 80 12 — 1 + 2 8. Total Capital Accoun ts...................................... 399 + 5 + 31 226 + 2 + 11 173 + 3 + 20 9. Total Liabilities and Capital Accounts.... $5,912 $ + 287 $3,483 $ + 165 $2,429 $— 53 $— 176 $— 123 6 $+122 1 Includes 12 St. I,ouis, 6 Louisville, 3 Memphis, 3 Evansville, 4 Little Rock, and 4 East St. Louis-National Stock Yards, Illinois, banks. Some of these banks are located in smaller urban centers, but the majority are rural area banks. 3 Includes vault cash, balances with other banks in the United States, and cash items reported in process of collection. 2 Includes all other Eighth District member banks. Page 65 A gr i cu l t ur e Agricultural conditions in the Eighth District continued to be favorable during March and April except for below freezing temperatures in midApril which damaged the fruit crop in parts of Mis souri, Illinois, and Indiana. Spring field work was well advanced and estimates of winter wheat pro duction indicated an excellent crop for 1953. Wheat crop estimates— The April 1 wheat crop report, reflecting the favorable weather during the winter, indicates a 117.6 million bushel crop for district states, 3 per cent more than the 1952 bumper crop. This new forecast shows improved condi tions in all district states compared with December, when it was estimated that production would be 20 per cent less than in 1952. All district states except Indiana are expected to have better crops than last year. In contrast, production for the United States as a whole is expected to be nearly one-third less. C A S H FARM IN C O M E (In thousands of dollars) $ 20,135 118,296 70,331 23,684 23,977 55,878 26,117 7 -State Totals............ , $338,418 8 th District Totals... . $142,732 Estimated production April 1, 1953 600 A rkansas....................................... Illinois............................................ 42,672 Indiana........................................... 35,788 K entucky....................................... 4,745 M ississippi..................................... 28,704 M issouri......................................... 425 Tennessee...................................... 4,674 District States............................ 117,608 United States.............................. 714,154 +52% + 3 — 3 + 3 + 9 +82 +17 + 3 — 32 — 34 — 19 — 81 — 26 — 29 — 52 $ 48,552 298,235 156,557 150,653 56,453 134,957 80,637 — 10 — 18 + 9 -2 0 — 10 - 4 3 % — 13% — 46% — 17% — 34% — 21% + 3 — 1 — 4 — 6 +12 +23 + 8 +29 $926,044 $408,533 — 36% _ 9 + 2 % - 0 -% — 5 % — 1% _________ Receipts___________ Cattle and calves.... H o g s ............................ Sheep........................... Totals..................... — 12 — 12 + + 3 5 M ar., 1953 102,677 275,961 38,252 416,890 March, '53 compared with F e b .,*53 M a r.,*52 +12% +46% +23 — 8 +36 + 3 + 21% + 2% Shipments_________ M arch, *53 M ar., compared with 1953 F e b .,*53 M a r.,*52 58,774 + 9 5 % +95% 89,729 + 97 +18 14,664 +124 — 6 163,167 + 9 9 % ‘ + 3 4 % between areas, corn acreages will be reduced in the southern district states, but increased in Illinois and Indiana. Soybean acreages will be cut in Arkansas and Tennessee, but increased in Illinois, Missouri, and Indiana. The intentions to plant larger corn and soybean acreages in Illinois and Indiana reflect, partially at least, plans for smaller acreages of oats. In the South, acreage taken out of corn and soy beans likely will be planted to cotton. Percent change from 1942-51 average Percent change from 1952 — 29% R E C E IP T S A N D S H IP M E N T S A T N A T IO N A L S T O C K Y A R D S E STIM A T E D W IN T E R W H E A T PR O D U C TIO N E IG H T H D IST R IC T S T A T E S , A P R IL 1, 1 9 5 3 (I n thousands of bushels) Feb.. 1 9 5 3 2 month total Jan. thru Feb. 1953 compared with compared with Jan., Feb., 1953 1952 1951 1952 1953 Feb., 1953 +65% +59 +25 — 2 +36 +91 +12 +36 — 10 Prices— Agricultural prices received by farmers in March were slightly higher than a month earlier. The index of 264 (1910-14== 100), however, was 8 per cent lower than a year earlier, although at this level prices were 6 per cent above the average for June, 1950, just prior to Korea. Prices paid also were higher. Thus, the parity ratio remained un changed at 94 for the month. Source: Crop Prod uction , U S D A , April, 1953. Prospective plantings— If farmers carry out their March intentions, over-all acreages of corn, oats, and soybeans in the district will be very nearly the same as last year, hay acreages will increase 3 per cent, and rice 6 per cent. Tobacco acreages will be reduced 6 per cent by cuts in acreage quotas. As P R O S P E C T IV E PLA N TIN G S EIGHTH D ISTR IC T S T A T E S , 1 9 5 3 (Acreage in Thousands) Corn_______ Indicated acreage 1953 Arkansas................ Illinois.................... Indiana.................. K entucky............... M issouri................ M ississippi............ Tennessee.............. District States..... United States...... 781 9,126 4,773 2,094 4,247 1,645 1,880 24,546 81,764 Change from 1952 — 21% + 2 + 2 — — 1 1 — 10 — 8 — 1 — 1 ______ Oats______ Indicated acreage 1953 324 3,201 1,387 164 1,534 316 374 7,300 43,777 Change from 1952 + 75% — 6 — 5 + 5 - 0 + 38 + 17 -0 - + 2 Soybeans Indicated Change acreage from 1952 1953 904 — 5% 3,722 + 2 1,797 + 4 222 + 1 + 3 1,855 — 10 556 — 8 300 9,356 15,862 + + 1 1 ________ H a y _______ ______Tobacco ____ Indicated Change from acreage 1952 1953 1,093 + 9% 2,532 — 7 1,772 — 1 1,891 + 8 3,630 + 6 745 + 8 1,578 + 8 13,241 + 3 Indicated Change from acreage 1953 1952 Indicated Change acreage from 1953 1952 503 + 5% 74,859 - 0 - Source: Crop Production, P rospective Plantings, U S D A , M arch, 1953. Page 66 .... .... ....% .... 10 — 8 326 5 — — 7 4 Rice .... 109 450 1,659 58 + 12 .... 4 — — .... 6 561 2,119 6 + + 6 5 N ew Debit Series g E G I N N I N G W IT H M ARCH, 1953, data on debits to deposit accounts have been revised to increase their statistical value and to reduce some what the burden on reporting banks. The revised series comprises debits to demand deposits of indi viduals, partnerships, and corporations and states and political subdivisions. Debits to both United States Government accounts and time deposit ac counts as well as those to interbank accounts are now eliminated. The change will result in relatively small adjust ments in the dollar volume of debits, but greatly improve data for analytical purposes. On the new basis, it is estimated that the 1952 debit volume for the 22 Eighth District reporting centers was about 3 per cent less than shown by the old series. The amount and degree of difference between the old and new series, however, varies according to in dividual months and cities. The elimination of debits to Treasury Tax and Loan accounts and other Government accounts at commercial banks has removed from the monthly series an irregular factor not related to economic conditions. In order that data on debits to United States Government deposit accounts may be avail able, a new series on payments from Treasury accounts at Federal Reserve banks will be inaugu rated soon. These payments are more accurate indicators of Government spending than are figures of debits to Government accounts at commercial banks, which reflect principally the shifting of de posits from commercial banks to Federal Reserve banks in anticipation of payments. The elimination of debits to time deposits from the series will have little effect on the reported vol ume of debits, since time deposits are relatively in active, but it will improve the significance and comparability of rates of deposit turnover. Pre vious to the revision, differences in computed rates of deposit turnover between centers reflected differ ences in the relative importance of time deposit accounts as well as actual divergences in economic activity. Debits to deposit accounts are an important indi cator of business activity. Spending by individuals and businesses determines, to an important extent, the level of business activity in the country. If the flow of spending increases, business, production, and employment are g e n e r a l l y stimulated. Check volumes are helpful in measuring this rate of spend- D E P O S IT A C T IV IT Y ________ D ebits 1 March Percent 1953 Change from (I n February M arch millions) 19532 19522 E l Dorado, A rk.............. $ Fort Smith, A rk ............ Helena, A rk ...................... 28.8 48.1 9.1 +27% + 12 + 11% + 9 + + 8 + 14 3 Little R ock, A rk ............ Pine Bluff, A r k ............... 173.0 37.8 Texarkana, A rk .............. A lton, 111........................... East St. Louis* National Stock Yards, 21.9 + 5 + 39 34.5 Evansville, In d............... Louisville, K y ................. Owensboro, K y .............. Paducah, K y .................... Greenville, M iss............. Cape Girardeau, M o ..... Hannibal, M o ................. Jefferson City, M o ........ St. Louis, M o ................. 11.4 13.4 11.9 1 1 .0 17.2 15.7 14.5 13.2 1 2 .8 + 18 + 14 + 34 + 21 13.6 14.4 13.2 138.0 35.1 177.8 + 24 + 13 + 16 + 14 29.0 15.2 19.1 27.5 + 5 + 34 722.0 40.2 46.2 + 8 — 5 25.4 14.3 24.5 15.7 14.5 14.6 2 2 .1 13.8 9.6 57.7 2,152.4 1 1 .8 Springfield, M o .............. Jackson, Tenn................. M emphis, Tenn.............. +26 Turnover M arch Year 1953 Ended (A n nual M ar. 31, R ate) 1953 72.0 21.4 690.3 $4,563.6 + 11 — 8 + + + + + + 15 16 18 25 4 21 + 10 + 11 + 18% + 10 + 2 + 18 — 4 + 11 + 9 +44 + 18 + 10 + 8 + 7 + 10 + 15% 14.4 12.7 12.5 8 .8 1 1 .0 23.2 9.8 15.0 11.9 11.9 14.3 16.6 1 1 .1 9.0 11.5 2 0 .1 27.0 9.8 14.9 11.4 24.5 21.7 19.7 1 1 .0 1 Debits to demand deposit accounts of individuals, partnerships and corporations and states and political subdivisions. 2 Percentages are to estimated data for February, 1953 and M arch, 1952. ing. Debits data must, of course, be interpreted with care. Checks drawn for other than payment of current goods and services, such as financial trans fers, are not constant in dollar amount or as a per centage of total debits. Further, in comparing debits over a considerable time span, the larger volume of payments arising from specialization of economic activity and changes in debt settlement customs must be taken into consideration. However, when so used, data on debits to deposit accounts are valuable for many purposes of economic analysis. The extensive use of debits as a barometer of business is also due to the fact that the figures are available historically, and for many localities, both small and large. In addition, debits are used in com puting the rate of deposit turnover, another impor tant tool of monetary analysis. Debits to deposit accounts at banks in 22 centers of the Eighth District have grown sharply in the postwar period reflecting both the rise in price levels and increased production. In 1952, the dol lar volume of checks cashed was 88 per cent more than during 1945. By comparison, the growth na tionally was 74 per cent. Page 67