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Monthly Review R Volume X X IX E S E R V E A N K NOVEMBER 1, 1947 Number 11 Surplus War Plant Disposal U nder the pressure o f w artim e needs, m anufac turing facilities costin g m ore than $1.4 billion w ere con structed in the E ighth D istrict b y the Federal G overnm ent and b y private industry. A p p ro x i m ately $690 m illion w a s spent fo r buildings and $721 m illion fo r equipm ent. T h ese plants, togeth er w ith oth er establishm ents in the district, prod u ced about $7 billion w orth o f material, supplies and equipm ent for the arm ed forces, and their op eration meant a substantial increase in incom e, com pared w ith prew ar levels, to the p eople w h o w orked in them and to the com m unities in w h ich th ey w ere located. E arly in the w ar period, h ow ever, it w as rec ogn ized that these econ om ic benefits w ere o f a h igh ly tem porary character, b ein g su bject to cu r tailm ent w h en w ar su pply con tracts w ere at an end. T h is m eant that if the w artim e con stru ction pro gram was to p roduce long-term advantages fo r the district, m eans w ou ld have to be discovered to utilize these facilities in postw ar industrial opera tions w h erever possible. T o achieve this goal, m ost o f the w ar plants w ou ld have to be con verted to the p rod u ction o f peacetim e g ood s under private ow n er ship o r con tin u ed in operation by the G overnm ent. In m any o f the new plants and in m uch o f the m an ufactu rin g capacity added to old plants in the district, adaptability to the product on o f p ostw ar civilian-type g o o d s w as fairly clear at the tim e o f con stru ction . H ow ev er, a large num ber o f p rojects had to be special purpose in character, designed solely fo r the m anufacture o f w ar good s. A dap ta bility to private business operations after the w ar in these cases was far from clear. In general, it w as to be anticipated that physical con version to peacetim e p rod u ction w ou ld be less difficult fo r privately-financed facilities than for those built b y G overnm ent. T h is resulted chiefly from the fact that private capital tended to flow on ly into facilities fo r w hich p ostw ar uses cou ld be pre dicted. W h e re v e r d ou bt existed as to their co n vertibility, w ar plants w ere con structed b y the G o v ernm ent. In addition, m ost G overn m en t-bu ilt p r o j ects w ere large, in term s o f capital investm ent and physical size, and con sequ en tly if attractive at all to private industry, cou ld be utilized on ly b y co m panies en gaged in large-scale industrial operation s. Y e t, if w artim e incom e gains, or a substantial p o r tion o f them , w ere to be preserved, it was essential that these plants be adapted to private industrial operation s prim arily because it w as these facilities w h ich a ccou n ted for the bulk o f the benefits received b y district com m unities as a result o f the w ar p ro duction program . T h is is the story o f the extent to w hich these publicly-fin anced w ar plants have been con verted to peacetim e uses, and o f the part they are p la yin g in the p ostw ar e con om y o f the district. It is con cern ed prim arily w ith the present utilization o f w ar-built plant space— not w ith projects w hich involved on ly the installation o f equipm ent. C H A R A C T E R IS T IC S O F D IS T R IC T W A R P L A N T S It is difficult to draw a w ord picture o f what m igh t be regarded as a “ typical* w ar plant. F a cili ties con stru cted durin g the w ar years varied co n siderably— in term s o f capital investm ent, e m p lo y m ent, physical size and types o f product. In gen eral, how ever, p rojects financed by the G overn m en t tended to have certain com m on characteristics. Sim ilarly, new plants built w ith private capital had d istinguishing earmarks w h ich tended to differen ti ate them from p ublicly-fin anced facilities. In term s o f num ber o f plants, m ost o f the indu s trial facilities authorized fo r con stru ction in the district prior to the end o f 1944 in v olv ed on ly a small capital investm ent. F ifty -eig h t per cent of the authorizations for structures w ere estim ated to cost less than $50,000 each, and their com bin ed cost represented barely 1 per cent o f the total exp en ditures for structures. A t the oth er extrem e w ere large p rojects for w h ich structures w ere estim ated to cost m ore than $1 m illion each. A lth ou g h they constituted on ly 12 per cent o f the num ber o f stru c ture authorizations, in the a ggregate th ey accou n ted for nearly 95 per cent o f the funds authorized to be spent for buildings. Industrial facilities built b y the G overn m en t usu ally involved large capital outlays, and these are the facilities ordinarily called to mind w hen one thinks of “ war plants” . A total o f 82 plants w ere financed w h olly or largely w ith public funds and the total authorizations am ounted to $1.2 billion. A p p r o x i m ately $638 m illion or 53 per cent w as for structure while $566 m illion or 47 per cent represented equip ment costs. O b viou sly, individual p rojects built by the G overnm ent usually involved a substantially larger investm ent both in plant and equipm ent than did the average facility con structed b y private co m panies. T h u s, the largest authorization fo r a facility built b y private industry w as for $11.5 m il lion. O f the 82 G overnm ent plants authorized, 33 w ere estim ated to cost that m uch or m ore, and the largest public authorization, fo r the St. L ou is O rd nance plant, actually am ounted to m ore than $130 m illion. N ot on ly w as the p ublic investm ent in district w ar plants large in total dollar value, but it w as concentrated in strictly w ar g ood s m anufacturing capacity. T w en ty-sev en o f the 82 p u blicly-bu ilt plants w ere in the ordnance industry. O f these 27 facilities, w h ose a ggregate cost to the G overn m en t approxim ated $844 m illion, 20 w ere strictly m uni tions m anufacturing plants, 4 p rod u ced clo se ly re lated chem icals, w hile on ly 3 m anufactured other types o f ordnance materiel. A d d ition a l large sum s were expended in the chem ical, non ferrou s metals and aircraft industries. T og e th e r w ith the ordnance plants, these facilities a ccou n ted for $1.1 billion or 93 per cent o f all G overnm ent expenditures and 80 per cent o f the estim ated com bin ed co s t o f public and private plants built in the district. Page 122 In contrast, the am ount o f private capital invested in these industries am ounted on ly to som e $75 m illion. In addition to the G overn m en t-bu ilt p rojects that in v olv ed new plant as w ell as equipm ent, som e p u b lic capital was used to finance equipm ent installed in existin g privately-ow n ed facilities or in new structures built during the w ar b y private industry. E qu ipm en t used under such an arrangem ent ord i narily was designed to m anufacture g o o d s not to o different from the op eratin g com p a n y's cu stom ary produ ct. W h ile the p ublic a gen cy held title to the m achine, the w artim e operator w as given a priority in the event he w anted to b uy the equipm ent at the end o f the war. P rojects o f that type constituted no particular disposal problem and w ere n ot in cluded in this study. A ltog eth er, a total o f 77 co m panies operated equipm ent co stin g $37 m illion b ou g h t b y the G overn m en t under this or similar arrangem ents. O ne-third o f the equipm ent, on a value basis, was installed in oil refineries. A n addi tional 17 per cent w as specialized ordnance equip m ent and the rem ainder w as distributed fairly gen erally am on g other industries. Plants built b y the G overn m en t usually w ere new7 plants, not expansions o f e xistin g facilities. It is evident, o f course, that a differentiation betw een n ew and expanded facilities becom es largely a m at ter o f definition. A s used in this study, structures built b y the G overnm ent on or adjacen t to the site occu p ied by an existin g m an ufactu rin g com pa n y w ere regarded as plant expansions. Structures built b y the G overnm ent on sites w here no facilities existed b efore w ere considered n ew plants. O n the basis o f such classifications, 49 o f the 82 p u b liclyfinanced plants w ere new establishm ents w hile 33 w ere expansions o f existin g facilities. It is difficult to determ ine from the available sources o f inform ation w hether authorizations for privately-financed plant and equipm ent represented new plant facilities or expansions o f establishm ents in operation prior to the war. It w ou ld appear, how ever, that m ost o f the structures that w ere financed privately represented capacity added to established com panies. G overn m en t funds, as w ell as those advanced by private industry, tended to flow into facilities located in or near the established industrial centers in the district. A lm o st 80 per cent o f all public investm ent was in plants located in the industrial areas o f St. Lou is, L ou isville, E vansville, M em phis, and L ittle R ock , and 55 plants or 67 per cent o f the 82 G overn m en t-con stru cted facilities w ere built in these areas. T h e bulk o f private capital investm ent also concentrated in these centers, reflecting the fact that the preponderance o f private funds was invested in a relatively few plants located in the larger cities. A p p rox im a tely 80 per cent o f the funds origin atin g in private sources w ent into facili ties located in the district's m a jor industrial areas. E M P L O Y M E N T IN D IS T R IC T W A R P L A N T S T h e w artim e econ om ic gains, m easured in term s o f em p loym en t and incom e, that accrued to the dis trict as a result o f the operation o f w ar plants w ere substantial. A t its peak, total nonagricultural em p loym en t in the five m a jor industrial areas o f St. I^ouis, L ou isville, E vansville, M em phis and L ittle R o ck w as 35 per cent larger than early in 1940. M ost o f the gain was in m anufacturing industries w h ich , at their w artim e peak, em p loyed tw ice as m any w orkers as in early 1940. T h e im portance o f w ar plant operations is indi cated b y the fact that in D ecem ber, 1943, when aggregate em p loym en t in these industries reached its highest level, a total o f 294,000 w orkers w ere em p loyed in the prod u ction o f ordnance m aterial, aircraft, ships, and sim ilar w ar good s. It is esti m ated that app roxim ately 45 per cent o f all m anu factu rin g w orkers at that tim e w ere em p loyed in strictly w ar g ood s prod u ction w hile a substantial p ortion o f the rem aining 55 per cent w ere indirectly en gaged in the m anufacture o f such items. W h a t the wrar plants meant in term s o f incom e to the district is su ggested b y D epartm ent o f C om m erce estim ates. In the district states, payrolls in the w ar m anufacturing industries (ch em icals, ord nance, rubber, m achinery, iron and steel, and sim ilar h ea v y -g ood s industries) increased from $1.3 billion in 1940 to $4.5 billion in 1944. T h ese p ay rolls reached their peak o f im portance, relative to total incom e in the district states, in 1943 w hen they represented from 3.2 per cent o f total incom e in A rkansas to as m uch as 32.9 per cent in Indiana. T h e vuln erability o f w ar plant em ploym en t and payrolls, on ce the w ar w as at an end, becam e ap parent early in 1944 w hen cutbacks in ordnance p ro d uction occu rred. B y the end o f that year em p loy m ent in the district w ar plants was 13 per cent less than at the D ecem ber, 1943 peak, and b y the last quarter o f 1945 these plants em p loyed less than onethird as m any w orkers as at the w artim e peak. A g g reg a te payrolls o f all w ar m anufacturing indus tries in the district states in the fourth quarter o f 1945 d rop ped to $2.9 billion, a decline o f 35 per cent from the 1944 level. W h ile payrolls in these states declined less than in the rem ainder o f the nation, the loss o f incom e w as significant and focu sed atten tion on the need to d evelop uses fo r district war plants in the p ostw ar period. T H E D IS P O S A L P R O B L E M W ith the end o f the w ar cam e cutbacks in p ro du ction and em p loym en t in the district w ar plants, m arking the end o f one phase and the begin n in g o f another in the econ om ic developm en t o f the region . It w as apparent that the preservation o f e co n o m ic gains w h ich originated in the w artim e operation o f district w ar plants w as in large part con tin gen t u pon (1 ) the extent to w hich facilities cou ld be con verted to peacetim e operations b y pri vate industry, and (2 ) the level of operations m ain tained in those plants w h ich w ere to be retained by the G overnm ent. D ifferen ces in the types o f problem s in volved in the con v ersion o f facilities to peacetim e uses largely w ere related to differences in ow nership o f the plants. In general, those plants privately built and ow n ed con stitu ted n o particular problem . A s in dicated elsew here, private industry, in m ost cases, financed facilities that w ere closely related to their norm al operations. Furtherm ore, they w ere usually facilities capable o f p rod u cin g g ood s for w hich civilian m arkets w ere predictable. C onsequently, their transition to peacetim e operation w as a cco m plished w ith relative ease, and th ey have continued to play a part in the district’s econ om ic d evelop ment. In the case o f p u b licly-ow n ed plants, h ow ever, a num ber o f problem s w ere inherent in their con v er sion to peacetim e utilization. M an y o f these p ro b lem s cou ld be settled o n ly in term s o f public p olicy. F o r exam ple, w h ich plants cou ld be released for possible private use and w hich facilities should be retained on a stan dby basis? I f declared surplus to probable G overnm ent needs, should the facilities be sold intact, plant and equipm ent, or w ou ld the public interest be served best b y d isposin g o f the com pon en ts separately? I f it appeared likely that a given facility should be retained on a standby basis, or perhaps operated at a reduced level, could a portion o f the plant be leased to private indus tries? O n ce the initial step w as taken, that is, a par ticular plant was declared w h o lly or partly surplus to anticipated G overn m en t requirem ents, there still rem ained the problem o f disposin g o f the facility to private industry. W h ile the m echanics o f this p ro gram are o f no particular con cern here, it is w orth n otin g that p rop erty ow n ed b y a G overnm ent agen cy, fo r exam ple, the W a r D epartm ent o r the D efen se Plant C orporation, m ight be declared sur plus b y the a gen cy and (1 ) sold or leased direct to private indu stry ; (2 ) transferred to another public agen cy ; or (3 ) turned o v e r to the W a r A ssets A dm in istration fo r disposal. Page 123 C harged w ith the resp on sibility o f return in g as m any as possible o f the G overn m en t-bu ilt facilities to p rod u ctive use under private business operation s, th e W a r A ssets A dm inistration , su ccessors in early 1946 to the W a r A ssets C orp oration w h ich w as a subsidiary o f the R econ stru ction F inance Corpora^ tion, faced a num ber o f technical difficulties. A s p ointed ou t earlier, m ost o f the district w a r plants w ere large and required large-scale industrial opera tion s fo r efficient use. M a n y w ere d esign ed fo r m unitions p rod u ction and w ere not adaptable to private business. S om e w ere h igh ly inefficient plants, w hen ju d g ed b y peacetim e standards. T h ese and other problem s tended to n arrow the field o f possible civilian uses fo r surplus plants. In addi tion, the W a r A ssets A dm in istration was required to dispose o f facilities in a m anner that w ou ld p ro m ote com petition, a factor o f particular significance with respect to the alum inum industry plants and synthetic rubber facilities in this district. P R E S E N T S T A T U S O F D IS T R IC T W A R P L A N T S It is difficult to measure, w ith any precision, progress o f the surplus p rop erty disposal p rogram either in term s o f original cost o f these facilities or the financial return to the G overn m en t from the sale or lease o f property. In som e cases the equip m ent was sold with the plant and in oth er instances it was rem oved and sold under the general p rop erty disposal program . T h e industrial facilities in som e plants have been retained b y the o w n in g a gen cy w hile all or part o f the n on -op era tin g p ortion s have been declared surplus. Som e p rop erty has been transferred to local govern m en ts at a 100 per cen t discount. In short, there are num erous variations on the disposal them e, m aking it virtu ally im possi ble to arrive at a precise estim ate o f the total dollar value o f prop erty disposed of. A s sh ow n in the a ccom p a n yin g table, 64 o f the 82 industrial facilities built b y the G overn m en t o r in w hich p ublic funds accou n ted fo r the bulk o f total P R E SE N T ST A T U S O P IN D U S T R IA L W A R P L A N T S B U IL T IN E I G H T H D I S T R I C T W I T H P U B L I C F U N D S , 1940-19441 (C ost Figures in Millions o f D ollars) Surplus— N o t N ot Total S o ld * Leased Disposed of Surplus No-. Cost Industry N o. Cost N o. Cost N o. Cost N o. Cost 38 $323 9 $143 Total ............ 82 $1,201 18 $502 17 $233 843 7 Ordnance ...... 27 3 43 4 134 176 490 13 9 107 19 4 Chemicals .... 88 5 2 9 1 Petroleum .... 7 "l 2 21 Iron and Steel 1 l 13 8 Nonferrous Metals ...... 12 5 105 21 3 7 3 7 70 1 M achinery .... 10 36 7 14 1 2 1 5 15 1 Aircraft ........ 8 65 7 64 1 1 Shipbuilding.. 13 3 3 13 * Other ............ 9 2 1 3 1 1 "S * Based on expenditures for projects costin g $25,000 or m ore authorized between mid-1940 and D ecem ber 31, 1944, as reported by the W a r P ro duction Board. Excludes projects involving equipment only which in the aggregate amounted to $37 million. 2 Includes 5 plants sold for salvage, 4 facilities sold at 100 per cent discounts to local or state governm ents and 2 plants partly sold. * Less than $1 million. ....„ tt > .... M# Page 124 .... ... ... ...... ...... expenditures have been declared surplus. In clu ded are plants ran gin g in size from the $150,000 plant built fo r M ines E qu ipm en t C om p an y in St. L o u is to the $67 m illion W e ld o n S p rin g O rdn an ce plant. H ow ever, the facilities at the lo w er end o f the cost scale represent b y far the b u lk o f the n u m ber o f surplus p la n ts; m any o f the large p ro je cts continue under the con trol o f the G overn m en t. T h is is evi denced b y the fact that w h ile a bou t 78 per cent o f the num ber o f publicly-fin anced plants have been declared surplus, these facilities represent less than t>0 per cent o f the total p ublic investm ent in all dis trict w ar plants in w h ich the structures w ere built largely b y the G overn m en t. O f the 64 plants declared surplus as o f early O c to ber, 47 or three-fourths have been disposed of, either entirely or in part. T h e aggregate original cost to the G overnm ent o f these 47 facilities was $466 m illion, equal to tw o-th ird s o f the author ized cost o f all surplus p u b lic plants and to alm ost 40 per cent o f the $1.2 billion invested b y the G o v ernm ent in the d istrict’s industrial facilities. T h irty eight o f the plants disposed o f have been sold and nine have been leased to private com panies. H ow ever, n ot all the plants classified as sold have been or w ill be con verted into civilian prod u ction . F ive establishm ents, co m p le te ly unattractive to pri vate industry, have been sold fo r salvage. P ortion s o f tw o oth er ordnance plants, one at Jacksonville, A rkansas, and on e at Crab O rch ard Lake, Illinois, are op eratin g under the m ultiple ten ancy plan and not all the facilities in these plants have been adapted to private industry as yet. A t the present tim e, 17 surplus plants have n ot been disposed of. In som e, the equipm ent has been rem oved but the structures are available fo r use. S om e are used as storeh ou ses b y the W a r A ssets A dm in istration . In a few instances n egotiation s for sale o f the p rop erty are b ein g con d u cted w ith som e likelih ood o f success, and som e plants are b ein g operated, under an interim lease arrangem ent, b y the w artim e operator. O rdnance Facilities— T h e largest total invest m ent in a single industry w as in the plants co n structed to m anufacture m unitions and oth er ord nance m aterial. A total o f 27 facilities o f this type w ere built b y the G overn m en t at an aggregate au th orized cost o f $844 m illion. F ou rteen o f these plants have been declared surplus and all but four o f the surplus plants have been d isposed of. T h e p ostw ar stories o f these plants provid e dra m atic exam ples o f con v ersion possibilities. F or exam ple, the A rkansas O rdn an ce P lant at Jackson ville has been sold in parcels to a n u m ber o f small com panies and oth er organ ization s. In addition to m an ufactu rin g establishm ents w hich have b o u g h t p ortion s o f the plant and are p rod u cin g furniture, chem icals, air con d ition in g equipm ent, processed animal hair used in brushes, cloth in g, and cushions, space has been sold to a laundry and d ry-clea n in g establishm ent and to the state h igh w ay departm ent. B ut the m ost strik in g use o f part o f the facilities is that p ortion sold to the A rkansas A ssocia tio n fo r C rippled Children. U sin g the infirm ary o f the plant, this A ssocia tion has established a 65-bed hospital for the treatm ent and care o f crippled ch il dren. U tilities in the plant area occu p ied b y the new firms are furnished b y com panies w h ich have b ou g h t the telephone and oth er utilities equipm ent in the p roject. T h e use o f this plant is an excellen t exam ple o f the effectiveness o f the m ultiple-ten ancy plan, and m igh t p rovid e experience fo r oth er co m m unities seekin g to d evelop uses for large warplant facilities n ow stan din g idle. T h is type o f plan also is b ein g put into operation in the Illin ois O rdn ance P lant at Crab O rch ard Lake. O perated d u rin g the w ar b y the S herw inW illia m s D efen se C orporation, this plant p rodu ced shells and bom bs. T o o large for a single industry to utilize, it has been divided into parcels for sale to sm aller enterprises. T h ere are eigh t com panies now in o r plan nin g to operate in the buildings, in clu d in g m anufacturers o f electrical equipm ent, gar m ents, furniture, and radion ics equipm ent. O th er ordn an ce plants have been sold or leased to single occu pan ts. T h e E vansville O rdnance Plant, after the rem oval o f all equipm ent, w as sold to the R oy a l C row n B o ttlin g C om pany. T h e to r p edo m an ufactu rin g plant in St. L ou is, operated during the w ar b y the A m erica n Can C om pan y, has been leased b y that com p a n y and is used fo r the m anufacture o f containers. In E l D orad o, A rkansas, the large O zark O rdn an ce plant w hich prod u ced am m onia and am m onium nitrate has been leased b y its w artim e operator, the L io n O il C om pan y, and n ow em p loys m ore than 500 w orkers in the p ro d u c tion o f these chem icals fo r peacetim e use. W in g fo o t H om es, In c., a su bsidiary o f G ood yea r T ire and R u b b er C om pan y, has leased the plant operated d u rin g the w a r b y W a lw o r th C om pan y in E ast St. L ou is and is en gaged in the p rod u ction o f pre fabricated houses. N ot all the ordn an ce plants have fou n d uses in peacetim e industries. T h ree o f these— at M ayfield and Paducah, K en tu ck y , and M illington , T en n essee — have been sold fbr off-site rem oval. T h e A to m ic E n ergy C om m ission has purchased a substantial part o f the steam gen eratin g equipm ent at the K e n tu ck y O rdn an ce W o rk s , P aducah. A fourth plant, G u lf O rdn an ce in M ississippi, has been transferred to the State and no industrial use is anticipated. O f the fo u r rem ain in g surplus ordnance plants, on e appears to o ffer possibilities fo r private indus trial use. T h is is the Standard Steel S pring plant at M adison, Illin ois, curren tly used as a w arehouse b y the W a r A ssets A dm in istration . H ow ev er, it is large and w ou ld be usable o n ly b y a large-scale, h eavy equipm ent industry. In addition, the m anu factu rin g facility con stru cted on the Scullin Steel C om pan y site in St. L o u is has lim ited industrial possibilities. W h ile capable o f b ein g adapted to civilian p rod u ction , it con sists o f h igh -cost units built to p rod u ce special purpose products, w hich are n ot particularly attractive to private industry as th ey stand tod ay. T h e oth er tw o rem aining surplus ordn an ce plants not disposed o f are the W e ld o n S prin g plant (a w artim e T N T p rod u cer) near St. L o u is and the S outhw estern P ro v in g G rounds at H o p e , A rkansas. N either o f these facilities seem s to be adaptable to private industrial use alth ou gh in the latter case there is som e p ossi b ility that the city o f H o p e m ay be able to buy certain o f the facilities fo r potential developm ent. T h irteen ordn an ce plants have been retained b y the G overn m en t, in their entirety or in large part. T h ese plants had an a ggregate authorized cost o f $490 m illion and represented 58 per cent o f total G overn m en t expenditures fo r ordnance facilities. Som e o f these plants bein g held b y the G overnm ent are operatin g, but at greatly reduced levels as com pared w ith the w ar years. In clu ded are the Indiana O rdn an ce plant, operated b y du Pont, and the G ood yea r-operated H o o sie r O rdnance W o rk s, both located at C harlestow n, Indiana. T h ese tw o facilities have been com bin ed into the Indiana A rsenal w h ich is on a standby basis, em p loyin g som e 400 w orkers engaged chiefly in re-sacking p ow d er and in general m aintenance. C om bined peak em p loym en t durin g the w ar w as 18,400. T h e N avy O rdn an ce plant at L ou isv ille is operatin g on a lim ited basis, e m p lo y in g 200 w orkers as com pared w ith 4,000 at the w ar peak. T h e Chem ical W arfare plant at M on santo, Illin ois, operated b y M onsanto C hem ical C om pan y, is in p rod u ction under a lease arrangem ent, and em p loys abou t half as m any w orkers as d u rin g the war. A t P ine B luff, Arkansas, the W a r D epartm en t has continued lim ited opera tions at the arsenal and in addition has leased p or tions o f the plant to private industries w hich are en gaged in the m anufacture o f chem icals, paper bags, and p re-fabricated houses. A portion o f the W o lf Creek O rdn an ce plant in T en n essee has been Page 125 sold to U .S. R u bb er C om p an y and is b ein g used in the m anufacture o f sportsw ear shoes. A n interestin g tw ist to the w ar plant story is b ein g p rovided b y the M issou ri O rdn an ce plant at Louisiana, M issou ri. W ith d ra w n from surplus in mid-1947 and transferred to the U .S. Bureau o f M ines, portion s o f the plant are b ein g integrated w ith new facilities in w hich experim ental w ork, u sin g Germ an p rocesses, w ill be con d u cted in the p rod u ction o f synthetic gasoline and oth er b y -p rod u cts from lo w grade coal. A p p rox im a tely 300 persons w ill be em ployed w hen the plant is in operation . T h e re m ainder o f the facility is b ein g held as standby equipm ent. T h e huge St. L ou is O rdnance plant is b ein g used by the W a r D epartm ent as a R ecord s A dm in istra tion Center w ith som e 9,900 w orkers em p loyed, as com pared w ith 34,000 at the peak o f the war. T h e N avy O rdnan ce plant at C am den, A rkansas, is used as a storage depot, em p loy in g 500 w orkers. T h e four rem aining facilities, the A rm or P iercin g Core plant in St. L ou is, Jefferson P ro v in g G rounds in Indiana, M aum elle O rdn a n ce at M arche, A rkansas, and O h io R iver O rdn an ce at H enderson, K en tu cky, are idle except for necessary m aintenance activities. O ne ordnance plant, not included in this tabula tion and a p ortion o f w h ose capacity expansion origin ally was financed b y the B ritish govern m en t, is the W estern C artridge D ivision o f O lin In d u s tries, Inc., at E ast A lton , Illin ois. P rior to the entry o f the U nited States into the w ar, this co m pan y’s facilities fo r the p rod u ction o f “ ball p o w d e r” were expanded con siderably, the additions b ein g financed in part b y the B ritish gov ern m en t and in part by the com pan y. A fte r Pearl H arbor, and the diversion o f all ou tput to the U .S. govern m en t, W estern C artridge purchased from the B ritish the p rodu ction line financed b y that govern m en t. C hem icals— T h e Federal G overn m en t’s invest m ent in new chem ical p rod u cin g plants in the dis trict was next in size to the expenditures fo r o rd nance facilities. H ow ev er, total p ublic financing o f chem ical plants am ounted to on ly $107 m illion or about on e-eigh th the investm ent in ordnance plants. N ine chem ical plants w ere built en tirely o r largely b y the G overnm ent. E ach has been or sh ortly w ill be declared surplus and four, w ith an aggregate cost o f $19 m illion, have been sold and are in operation. H ow ever, the tw o largest p ublic plants, both located in L ou isville, the d u P on t neoprene plant and the Carbide and C arbon C hem ical C orporation plant have n ot been disposed of. T h ese tw o facilities w ere a m on g the six plants built in this d istrict to m anufacture syn th etic rubPage 126 ber or basic chem icals used in its p rod u ction . F ou r o f the plants w ere located in L ou isv ille, the tw o already m entioned togeth er w ith the N ational S yn thetic R u bb er C om pan y plant and the G ood rich plant. D isp osition o f these units, and o f the tw o basic chem ical plants located in M em phis, operated b y Q uaker Oats C hem ical C om p an y and Southern A c id and Sulphur C om pany, h inged prim arily on p u b lic p o licy w ith respect to the volu m e o f syn thetic ru bber capacity to be m aintained in peace tim e, and secon d on the e co n o m ic efficiency o f the plants. O f the fou r synth etic ru bber plants located in L ou isv ille o n ly one, the G ood rich plant, ha? been sold. B ou gh t b y the w artim e operator, this plant has con tin u ed to operate, alth ou gh the future level o f p rod u ction is dependent upon the G overn m en t program w ith respect to purchases o f synth etic ru b ber. T h is plant cost $11 m illion and p rod u ced 8 per cent o f the n ation’s ou tput durin g the war. T h e d u P on t plant is b ein g operated under an interim lease arrangem ent and em ploys abou t 1,500 w orkers as .com pared w ith a w ar peak o f 2,200. Final d is p osition o f this plant has n ot been determ ined. W h e n it was offered fo r sale, the du P on t C om pan y subm itted a bid o f $13.2 m illion fo r this $43 m illion plant, but so far the G overn m en t has n ot a ccepted the offer. T h e tw o oth er L ou isv ille ru b ber plants, one op er ated d urin g the w ar b y the C arbide and C arbon C hem ical C orporation and the oth er b y the N ational Syn th etic R u bb er C om pan y, have n ot been disposed o f and are inactive. E ach is a high cost plant and the form er, w h ich is regarded as obsolete, has been offered fo r sale on a piecem eal basis. T h e w artim e op era tor o f the plant subm itted a bid for the m achinery but n o offers w ere received for the stru c ture w hen the bids w ere opened in O ctober. T h e N ational Syn th etic R u b b er plant, not yet actually declared surplus but soon exp ected to be, w as in operation until m id-1947. D isp osition o f this plant is undeterm ined. It is anticipated that w hen de clared surplus it w ill be offered fo r sale but on a standby basis. T h e tw o plants in M em phis w h ose basic output was used in the p rod u ction o f synth etic rubber have been sold and are in operation. T h e Q uaker O ats C om p an y b ou g h t the furfural plant it operated dur in g the w ar and n o w em ploys app roxim ately 100 w orkers. A n expansion program n o w under w ay is expected to increase p rod u ction b y 50 per cent. P resent capacity is 24 m illion poun ds per year. Furfural is m anufactured from cotton seed hulls, rice and oat hulls, and corn cobs, the latter b ein g collected th rou g h ou t the m idw est and delivered to the M em phis plant w here the price curren tly ranges from $6 to $11 per ton . T h e H eyd en C hem ical C om pan y b ou g h t the facilities operated b y Southern A cid and Sulphur C om p an y in M em phis and re cen tly ann ou n ced plans to expand con siderably the p rod u ctive cap acity o f the plant. P rin cipal p rod ucts are phenol, caustic soda and related chem icals. In addition to the a b ove plants the G overnm ent also built facilities fo r the N ational C arbon C om pany, In c., in L ou isv ille fo r the prod u ction o f indus trial gases. T h is plant, n ow bein g operated b y the com pa n y, is exp ected to be declared surplus sh ortly. A small industrial gas plant operated b y the H u m k o C om pan y in M em ph is w as b ou g h t b y that com pan y and curren tly is in produ ction . P u blicly-fin an ced facilities intended fo r operation b y the C hem ical Pulp D ivision o f the B u ck eye C otton O il C om pan y in M em phis, but never com pleted, are expected to be sold fo r off-site rem oval. N on ferrou s M etals In d u stry— n ly sligh tly less -O im portant than the chem icals industry, in term s o f public w artim e investm ent, was the nonferrou s metals industry in w h ich G overn m en t funds tota l ing $105 m illion w ere invested in this district. T h e principal facilities built w ere th ose for the p ro d u c tion o f alum inum and th ey w ere located in A rkansas. In clu ded w ere the alum ina plant at B au xite and the alum inum sm eltin g plant at Jones M ill, built at an aggregate cost o f alm ost $70 m illion, and operated d urin g the w ar b y the A lu m in u m C om pan y o f A m erica. A n oth er alum ina p rocessin g plant co st ing $12.9 m illion was built in East St. L ou is on land leased from the A lum in u m C om pany. In addition w ere tw o alum inum fabricatin g plants in L ou isv ille built at a cost o f alm ost $9 m illion and operated b y R ey n old s M etals C om pany. In M em phis, co n struction was begun on a third fabricating plant to be operated b y this com pany, but the p ro je ct w as never com pleted. T h e A rkansas plants, representing the bulk o f the G overn m en t’s investm ent in the industry in this dis trict, have been leased fo r five years b y R eyn old s M etals C om pan y. L ess than 50 per cent o f the p ro ductive facilities are b ein g operated and a p p rox i m ately 1,000 w orkers are em p loyed in the tw o plants. T h e in com p leted electric p ow er gen eratin g plant, built to furnish p o w e r to the Jones M ill plant, was b ou g h t b y A rkansas P o w e r and L ig h t C o m pany and m ore than $8 m illion is b ein g spent b y the com pan y to com plete the plant. T h e p rocessin g plant at E ast St. L ou is, fo r w h ich n o civilian use w as practical, w as sold for salvage and is b ein g dis m antled. O ne o f the t w o fab rica tin g plants in L ou isv ille is in operation , h avin g been b ou g h t b y R eyn old s M etals, and is used in the m anufacture o f alum inum ware. T h e second plant, also operated b y R eyn old s during the war and until the close o f 1946, at pres ent is held in standby, pending its final disposition. O ffered for sale early this year, the plant has at tracted no buyers alth ou gh the R ey n old s C om pany offered to lease the facilities under various p ro p o sals. A ll bids w ere rejected and final disposal has not been made. In addition to the alum inum plants, the G ov ern m ent also con structed facilities for the refining o f zinc. T w o a d join in g plants w ere built in M on san to and Fairm ount C ity, Illinois, and w ere operated b y A m erican Zinc, L ea d & Sm eltin g C om p an y. T h ese plants have not been declared surplus but continue to be operated b y A m erican Z in c under a lease arrangem ent. A lead refinery fo r th e m illin g o f crude ores, built in F rederick tow n , M issouri, and operated by a subsidiary o f N ational L ead C om pany, was declared surplus and is in operation under an interim lease b y the w artim e operator. A ircraft In du stry— T h e rem aining m a jor facilities financed publicly w ere th ose fo r the p rodu ction o f aircraft. E ight facilities, in v o lv in g a total author ized cost o f $65 m illion, w ere built b y the G overn ment. Seven have been disposed of, fou r through cash sales and three as a result o f 100 per cent dis count sales to local com m unities. T h e R epu blic A v ia tio n plant at E vansville and the C u rtiss-W righ t plant at L ou isv ille w ere pur chased b y International H arvester C om pany. T h e E vansville plant, w here, at the w a r’s peak, 7,900 w orkers w ere em p loyed in the p rod u ction o f P-47 airplanes, has been con verted to the m anufacture o f farm and h om e freezers, refrigerators and c o o l ers, with 2,200 em p loyees on the payroll. The L ou isville plant m anufactures tractors fo r use in sm all-scale farm in g operations. T h e first units w ere turned out in M ay, 1947, b arely one year after the plant was purchased from the G overnm ent. C ur rent produ ction rate is 100 tractors per day, to be increased to 50,000 a year in 1948. M ore than 3,400 w orkers are em p loy ed in the plant as com pared w ith w artim e em p loym en t o f 4,400. T h e aircraft assem bly plant in M em phis, operated b y Fisher B o d y D ivision o f General M otors C or poration during the w ar, w as b ou g h t b y the K im b erly Clark C orp oration to be used in the m anu facture o f K leen ex and oth er paper and cotton products. B uilt at a cost o f $4.8 m illion, this plant em ployed 7,100 w orkers during the w ar p ea k ; cur rent em ploym en t is abou t 1,400. In St. L ou is, m ost o f the $25 m illion Curti'ssW rig h t plant has been sold to the C ity o f St. L ou is Paige 127 for use in con ju n ction w ith the m unicipal airport. Part o f the m an ufactu rin g facilities have been leased by the city to M cD on n ell A ircraft C om pany w hich is en gaged in p rod u cin g jet-propelled planes for the N avy. T h ree aircraft m odification centers, located at Evansville, L ou isv ille and M em phis, have been transferred to the respective cities and are b ein g used as airport facilities. T h e o n ly district aircraft plant not disposed o f is the M cD on n ell A ircra ft plant in M em phis. T h is establishm ent, built at an authorized cost of $1.1 m illion w as declared surplus in A u gu st, 1946 and currently is used as a w arehouse by the W A A . O th er In du strial F acilities— O f the rem aining plants in w h ich p u b lic funds w ere invested, five are o f particular interest due to their wartim e and cu r rent im portan ce to district com m unities. T w o petroleum refineries in El D orado, Arkansas, operated durin g the w ar b y R oot Petroleum C om pany and the L io n O il C om pany, have continued in operation. T h e form er w as bought b y the wartim e operator and em p loys as m any w orkers n ow as during the w ar, w hile the L ion O il plant has been leased b y the w artim e operator. T h e steel m an ufacturin g facilities built by the G overnm ent at Granite C ity, Illinois, and operated b y the Granite C ity Steel C om pany have been leased fo r five years b y the com pany. T hese facilities con sist chiefly o f three open-hearth furnaces with a rated capacity o f about 300,000 tons o f steel ingots per year. A ls o at Granite C ity, Illinois, is a pig iron and cok e plant operated b y K oppers U nited C om pany. R ecen tly these facilities w ere bough t by the M issou ri-Illin ois Furnaces, Inc., after having been operated since the w ar b y the K op pers Com pany. D u e to the fact that m anufacturers in this area depend on this plant for a large part o f their p ig iron supply, con siderable interest developed in the offerin g o f the facilities fo r sale. T h e m a jor electrical equipm ent plant built in the district d urin g the w ar w as the E m erson E lectric plant in St. L ou is. C onstru cted at a total cost o f $15 m illion, the plant w as large, em p loyin g 10,600 w orkers at the w ar peak engaged prim arily in the prod u ction o f flexible gun turrets. E arly in 1946 the E m erson C om pany leased m ost o f the plant for 5 years and has centralized all its production in the plant. C urrently, em ploym en t is estimated at about 4,30Q w orkers. CONCLUSIONS T h e progress o f the surplus w ar plant disposal program m a y be m easured in terms o f financial re Page 128 turn to the G overn m en t o r b y the con trib u tion the program has m ade to the su ccessfu l con version o f these w ar plants to peacetim e industrial uses. H o w ever, dollar return from the sale o f plants is of little significance, in part because it m ust be related to w ar-inflated con stru ction cost figures w hich m easured inadequately the value o f the plants. M ore basic is the fact that w hen these plants were built, the need for their p rodu cts w as urgent. It is unrealistic and unfair to exp ect that w hen the very existen ce o f the cou n try is at stake, serious attention w ill be d evoted to co n stru ctin g w ar plants with both their w artim e and p ossible p ostw ar uses in m ind. T h u s it is inevitable that w hen sold to private industry, the financial return to the G overn m ent w ill be small in term s o f cost. In sofa r as the E ighth D istrict and individual com m unities w ithin the D istrict are con cern ed, the con version yardstick is o f prim ary im portance. M ost o f the surplus G overn m en t-bu ilt facilities that are readily adaptable to peacetim e uses already have been b o u g h t or leased b y private industry. It sh ould be noted that m uch o f the successful disposition o f w ar plants resulted from the fact that econ om ic con d ition s gen erally w ere favorable to the disposal program . It is im probable that m any of the facilities sold o r leased to private industry w ou ld have been b ou g h t o r leased under con dition s o f low er dem and fo r civilian g o o d s. O f the m a jor plants that rem ain to be disposed of, few appear to be attractive to private com panies. In som e instances th ey are integrated w ith pri v a tely-ow n ed plants and thus are usable on ly by the com panies on w h ose sites th ey are located. O thers are inefficient, b y peacetim e standards, or are special purpose plants. S om e o f the plants retained b y the G overnm ent m igh t be adaptable to peacetim e uses but the m a jority are ordn an ce facili ties w ith fe w con version possibilities. W h ile a substantial num ber o f the w ar plants have been sold o r leased to private indu stry and som e, retained b y the G overn m en t, are in p rod u c tion, their aggregate im portance, in term s o f e m p lo y m ent and incom e, is a great deal less than at the war peak. In 24 o f the m a jor n ew plants built in the district, and fo r w h ich data are available, peak w artim e em ploym en t w as about 155,000. C urrently, less than 22,000 w orkers are em p loyed in these establishm ents, o f w h ich abou t 45 per cent are in n onm anufacturing em ploym ent. T h u s w hile som e o f the loss o f em p loym en t and incom e has been recovered as a result o f the con v ersion o f w ar plants to peacetim e uses, additional increases are lik ely to be slight. W e ld o n A . Stein Survey of Current Conditions Inflationary forces w h ich steadily are gain in g in strength dom inate the short-run econ om ic ou tlook. E m p loym en t and p rod u ction are high n ow and are expected to con tin ue h igh in com in g m onths. N evertheless, dem and is increasing relative to sup ply as incom e rises and private credit expands sharply. A s a result, prices are likely to continue to m ove generally upw ard from current levels to new peaks. T h rou g h m ost o f the postw ar period the econ om y has operated under con d ition s o f full em ploym en t at a high w a ge level. B ecause o f this fact, con sum ers as a grou p have had a record am ount o f incom e w ith w h ich th ey have endeavored to b u y g ood s and satisfy other wants. B usiness incom e and expenditures also have been large, and these, too, have been reflected in produ ction , em p loy m ent and prices. A further im portant factor in the d om estic econ om ic situation is that volu m e o f co n struction a ctivity has been high. In the first nine m onths o f 1947, con stru ction activity (in term s o f d ollars) w as ov er 30 per cent h igher than in the com parable p eriod last year. In addition to d om estic dem and, shipm ents o f g o o d s abroad also have played a part in h old in g a high level o f econ om ic activity. H ow ever, as indicated in the K r u g C om m ittee report and else w here, exports represent a small p rop ortion o f our total ou tput and even should there be som e co n traction in exports, no substantial deflationary forces w ou ld be set in m otion soon. D om estic dem and, in m ost instances, apparently w ou ld absorb the good s n ow b ein g exported, w ith insignificant changes resu ltin g in the price structure. T h e m a jor exception to this broad statem ent w ou ld be farm products. A recent develop m en t o f considerable im portance in add in g strength to the inflationary m ovem ent is the sharp rise in private credit. W h ile private credit expansion has occu rred th rou gh ou t m uch o f the p ostw ar period, until recen tly it was m ore than offset b y con traction o f the public debt. C urrently, w ith public debt retirem ent at a slow er rate, expan sion o f private credit is add in g appreciably to the m on ey supply. L oa n s to business and on real estate have risen sharply. C onsum er credit also has gained considerably, even w ith con trols in force, and elim ination o f the con trols as o f N ovem b er 1 p ro b ably w ill g ive im petus to credit expansion in this field. T h e a bove should n ot be taken to mean that con su m er purch asing w ill contin ue indefinitely at any price level. S oon er or later the num ber o f b u y ers priced out o f the m arket plus th ose w h o refuse to bu y w ill increase to a poin t w h ere total dem and will be affected. H o w e v e r, there is n o eviden ce that w e have reached o r even approach ed that p oin t as yet. A n d unfortu n ately as m aladjustm ent piles upon m aladjustm ent, the inevitable correction takes on a m ore and m ore severe potential. EMPLOYMENT T h e em ploym ent situation in Septem ber, 1947 was very favorab le fo r b oth the nation as a w h ole and the E ighth D istrict, N ation ally, m ore civilians were w orkin g than ever b efore, the average w eek ly factory w age was at its highest level, unem ploym en t was at a m inim um , and few er people collected u nem ploym ent com pen sation than in any m on th since V -J D ay. In the E igh th D istrict, iionagricultural em ploym ent w as at a peacetim e high, several im portant labor disputes w ere settled, and the dem and for and supply o f labor w ere fairly w ell balanced. T h e district’ s m oderate lab or surplus, w h ich e x isted during the sum m er m onths, had dim inished b y Septem ber w ith the w ith draw al o f vacation workers. A lth ou gh u n em ploym en t in. Septem ber was on ly sligh tly a b o v e w hat m igh t be considered minimum , y o u n g persons w ith n o w o r k experience and older and handicapped w orkers w ere still hav ing difficulty finding jo b s. N onagricultural em p loym en t in the St. L o u is area during Septem ber, 1947 was at its highest level since the w ar peak o f 1943. A n em p loym en t in crease o f alm ost 2,000 betw een J uly and Septem ber, 1947 was the net result o f gains in m anufacturing, construction, and trade em p loym en t and decreases in m ining, service, and G overn m en t em ploym en t. INDUSTRY C O N S U M P T IO N O F E L E C T R I C I T Y Sept. A u g. Sept. Sept. 1947 fK .W .H . N o. o f Cus- 1947 1947 1946 Compared with in thous.) tomers* K .W .H . K .W .H . K .W .H .. A u g /4 7 S ept/46 Evansville ...... 40 9,101 9,473 7,369 — 4% -4 -2 4 % Little R ock .... 35 4,783 4.706R 3,611 4 -2 4 - 33 52,780 53,291 55.528R — 1 — 5 Louisville ____ 80 Memphis _____ 31 5,113 5,306 4,840 — 4 4* 6 , Pine Bluff ...... 22 6,240 6,450 1,171 — 3 -4-433 ' St. L ouis ___ 99 65,457 70,917 64,400R — 8 4* 2 Totals .......... 3 0 / 143,474 150,143R 136.919R — 4% 4 - 5%: ^Selected industrial customers. R — Revised. L O A D S I N T E R C H A N G E D F O R 25 R A I L R O A D S A T S T . L O U I S First N ine Days S ept/47 A u g /4 7 S e p t/4 6 Oct.*47 O c t/4 6 9 mos. *47 9 m os. *46 116,342 122,223 118,870 36,380 38,186 1,123,707 1,096,365 Source: Terminal Railroad A ssociation o f St. Louis. C R U D E O IL P R O D U C T IO N — D A IL Y A V E R A G E (I n thousands Sept., ’ 47 com p, with of bbls.) Sept., *47 A u g ., ’ 47 Sept., ’ 46 A u g., *47 Sept., *46 78.6 Arkansas .......... .. .. 82.1 81.7 4 4% ‘ 4- 1% - 0 — 16 174.0 205.8 ...173.7 — 8 19.3 17.1 .. 17.8 -4 4 — 18 31.1 25.2 Kentucky .............. ... 25.5 4- 1 — 11 - 0 334.8 298.0 .299.1 Page 129 INDUSTRY TRADE DEPARTM ENT STORES _______N et Sales____________ Sept.,’47 9 mos. ’47 com pared with to same Auer/47 S ept/46 period ’46 F t. Smith, A rk .....+ 2 6 % Little R ock, A rk. ..+ 2 4 Q u in cy, 111........ ......4-24 Evansville, In d .....— 3 Louisville, K y .......+ 2 6 St. Louis A rea1....-j-25 St. Louis, M o ...+ 2 6 E . St. Louis, 111.-4-14 Springfield, M o .....4*12 M em phis, Tenn.....-|-19 *A11 other cities....4-18 8th F .R . District..-f-22 Stock Stocks on Hand Turnover Sept. 3 0/4 7 Jan. 1 to comp, with Sept. 30 Sept. 3 0/4 6 1947 1946 — 2% — 12% — 20% 2.99 4- 5 — 2 — 7 3.53 — 7 - 0 3.28 4- 2 4-28 4-17 — 7 2.75 4-18 — 4 4 -1 0 3.53 — 2 4-16 4- 9 2.95 4-14 — 2 2.95 4- 7 4-98 4-93 4-22 2.97 + 4 4- 2 3.15 4- 8 + 1 + 1 4-18 2.93 + 17 4- 5 4-12 - 0 3.09 + ^ Pine B luff, A r k .; A lton, Harrisburg, 3.58 4.20 3.98 3.01 4.48 3.71 3.71 4.10 4.11 3.88 3.90 kinsville, M ayfield, Paducah, K y . ; Chillieothe, M o .; and Jackson, Tenn. 1 Includes St. L ouis, M o., East St. L ouis and Belleville, 111. T rading d a ys: Sept., 1947— 25; A u g ., 1947— 26; Sept., 1946- 24. Outstanding orders o f reporting stores at the end of September, 1947, were 29 per cent less than on the corresponding date a year ago. Percentage of accounts and notes receivable outstanding September 1, 1947, collected during September by cities: E xcluding E xcluding Instalm ent Instalment Instalment Instalment A ccoun ts A ccoun ts Acf'O’ints A ccounts F ort Smith............% 53% 65% Q uincy .......... ....35% L ittle R ock.... 31 53 St. L ouis............37 55 Other cities.... 31 59 L ouisville ...... 35 52 M em phis ...... 38 49 t h F .R . Dist. 36 53 IN D E X E S OF D E P A R T M E N T STO R E SALES A N D STOCKS E ighth Federal Reserve District Sept., A u g., July, Sept., 1947 1947 1947 1946 Sales (daily average), U nadjusted3.............. 340 204 249 316 Sales (daily average), Seasonally adjusted2 337 307 320 313 Stocks, U nadjusted3 ......................................... 273 273 257 266 Stocks, Seasonally adjusted3............ . 246 250 247 240 8 D aily A verage 1935-39 = 100. 8 End of M onth A verage 1 9 3 5 -3 9 = 100. S P E C IA L T Y STO R ES Stocks Stock N et S^les Turnover on H nnd Sept., ’47 9 m os.’ 47 Sept. 3 0/4 7 Jan. 1 to com pared with to same com p, with Sept. 30 A u g .,’ 47 Se^t..’ 46 period ’ 46 Sent. 3 0/4 6 1947 1946 4 -9 % 4 -2 % 4 -2 5 % 2.61 4.53 M en’ s Furnishings........ 4 -4 4 % 4 .2 0 4- 6 4-21 3.48 5.84 B oots and S hoes.......... 4-25 Percentage o f accounts and notes receivable outstanding September 1, 1947, collected during S eptem ber: M en’ s Furnishings ................. 54% B oots and Shoes..................... 47% T rading d a ys: Sept., 1947— 2 5 ; A u g ., 1947— 2 6 ; Sept., 1946— 24. R E T A IL F U R N IT U R E STO RES N et SMes Inventories Ratio of Sept. 1947 Sept. 1947 Collections compared with com pared with A u g /4 7 S en t/4 6 A u g /4 7 Ser>t/46 S ept/47 Sept/46 58% +43% 72% St. L ouis A +20% ....4 -2 2 % + 1% 57 +43 74 St. Louis ....4-21 + 17 + 1 i 27 26 Louisville A: +65 ....4-28 + 3 25 - 0 24 ....+ 3 3 +67 - 0 L ouisville 34 23 M emphis .... + 12 +23 — 24 36 30 — 4 ....+ 1 1 + 3 — 5 * * * * ....+ 3 0 + 5 42 +18 45 al3+ 1 9 +20 + 1 separately due to insufficient coverage, but included in totals. 1 Includes St. Louis, M issou ri; East St. Louis and A lton, Illinois. * Includes Louisville, K entucky ; and N ew A lbany, Indiana. 8 In addition to above cities, includes stores in Blytheville, F ort Smith and Pine Bluff, A rkansas; Henderson, Hopkinsville, Owensboro, Ken tu ck y ; Greenville, Greenwood, M ississippi; Hannibal, M issouri; and Evansville, Indiana. _ PERCENTAGE D IS T R IB U T IO N O F F U R N IT U R E SALE S Se*>t. 1947 A ug. 1947 Sept. 1946 Cash Sales ................................................... 7 7 7 7 % 19% 23% Credit Sales ................................................. ...... 83 81 77 T otal Sales .................................................. ..100 100 100 Page 130 Industrial activity in the E ighth D istrict in Sep tem ber was at about the sam e level as in A u gu st and was up som ew h at o v e r S eptem ber o f last year. Industrial p o w e r con su m p tion in the m a jor dis trict cities in Septem ber w as 4 per cent less than during the p reviou s m onth. L ittle R o ck w as the on ly city in w h ich a gain o ver A u g u st was regis tered and this gain w as slight. M an u factu rin g— A lth o u g h som ew h at affected by seasonal factors and b y a shorter w ork m onth, the general trend o f m an ufactu rin g a ctivity in Septem ber was not greatly different from that o f A u gu st and earlier. Increases in the m onth w ere indicated in w hiskey produ ction , fo o d processin g, m achinery, chem icals, and meat p ackin g operations, w hile the output o f lum ber, autom obiles, and n onferrous metals declined. Scheduled operations o f the steel industry in the St. L ou is area fo r S eptem ber w ere at 63 per cent o f capacity, sligh tly less than the 65 per cent o f the previous m onth. A t the close o f Septem ber there w ere 38 K e n tu ck y w h isk ey distilleries in operation. T h is co m pares with 21 in operation at the end o f A u gu st, and 31 in p rod u ction on Septem ber 30, 1946. T o ta l w h isk ey p rod u ction in A u g u st w as 3.8 m illion ga l lons, 10 per cent b e lo w that in July. A lth ou gh this was the low est p rod u ction o f any m onth o f 1947, it is in line w ith norm al seasonal perform ance. M eat p ackin g operation s at St. L ou is in S eptem ber w ere con siderably a bove the previous m onth. T h e total num ber o f anim als slaughtered under Federal inspection in the St. L ou is area in S eptem ber was 433 m illion com pared to 393 m illion slaugh tered last m onth. S laughter o f calves and sheep was about the sam e as last m onth but cattle slaughter increased about 15 per cent and slaughter o f hogs was 30 per cent above A u gu st. C on stru ction — B u ildin g perm its tota lin g $10.6 m illion w ere issued in the leadin g district cities in Septem ber. T h is was 27 per cent above the previ ous m onth and the highest m on th ly total in 1947. CONSTRUCTION B U IL D IN G P E R M IT S (M on th o f Septem ber) Ren'urs, etc. NeiV Construction Cost N um ber Cost Num ber (C ost in 1946 1947 1946 1947 1946 1946 1947 thousands) 1947 52 $ 571 51 $ 569 $ 95 95 112 $ Evansville ..... .... 127 202 191 64 1,606 300 334 150 L ittle R ock.... 114 70 55 77 206 1,126 1,306 75 L ouisville ..... 232 150 159 Memphis ........ .... 881 996 168 156, 554 3,101 349 1.699 244 2.0*6 St. L ouis ...... .... 296 l.Sft'O 312 299 Sept. Totals .. ... 1,650 1,119 $8,468 $4,197 984 794 $2,171 $1,327 A ug. Totals.... ....1,543 1,405 $7,108 $5,039 933 889 $1,242 $1,446 V alu e o f perm its in all the district cities except E vansville and L ou isv ille was h igher in Septem ber, 1947 than for the same m onth o f last year, and all cities excep t L ou isv ille registered increases over the previou s m onth. TRADE P R IC E S Septem ber sales volu m e at rep ortin g departm ent stores in the E ighth D istrict w as 22 per cent greater than in A u gu st and 12 per cent above volu m e in Septem ber, 1946. P relim inary reports indicate that the year-to-date gain o f 6 per cent p rob ab ly w ill be m aintained d urin g O ctob er. O n a seasonally ad justed basis, the index o f sales in Septem ber at reportin g stores reached a new peak o f 337 per cent of the 1935-39 average. T h e previous high o f 330 per cent cam e in A u gu st, 1946. T h is current rise in sales volu m e largely reflects further price increases, but to som e extent reflects purchases b y veterans with p roceeds o f term inal leave bonds. In term s o f value, inventories o f rep ortin g depart m ent stores at the end o f Septem ber show ed little change from both the previous m onth and the same date in 1946. L a rge inventories and general unbal ance in them , reported b y departm ent stores earlier in the year, have been adjusted in recent m onths. Stocks n ow bear a m ore norm al relationship to anticipated sales in m ost lines o f m erchandise. T h is not on ly reflects relatively cautious b u y in g policies o f m any stores, but also the fact that replacem ent o f inventories again has b ecom e som ew h at o f a p rob lem. M an y stores w h ich had ordered on ly a small percentage o f anticipated sales in the first part o f the year d iscovered upon re-en terin g the m arket at a later date, that prices in num erous lines o f g ood s have m oved sharply higher and g ood s w ere diffi cult to obtain. C onsequ en tly, ou tstan din g orders recen tly have risen in volu m e. M u ch o f the in crease, h ow ever, seem s to be due to com m itm ents to purchase g ood s fo r the holiday season. A t rep ortin g w om en ’s apparel stores, volu m e o f sales durin g Septem ber was 57 per cent greater than in A u gu st, and 14 per cent h igher than in S eptem ber, 1946. B ecause o f the con troversy over style W H O L E S A L IN G Lines o f Com m odities N et Sales Stocks Sept., 1947 Data furnished by Sept., 1947 compared with compared with Bureau o f Census, Sept., *46 Sent., 1946 IT. S. Dent, o f Comm erce* A u g., '47 Autom otive Supplies .......................... .. 4 -1 2 % % 4 -13 % + 16 .. 4-22 D ry Goods ............................................. .. 4-22 4- 1 4-10 4-14 4- 9 4-24 4-19 .. 4 - 4 Plumbing Supplies .............................. .. 4-37 4-57 4-13 T obacco and its Products................. . * 4 - 7 - 0 4-44 - 0 4-15 4- 4 4 -n * Preliminary. **Tncludes certain items not listed above. .... ,. .. .. changes in w om en ’s apparel, stores have been cau tious in their b u yin g policies. Inven tories at the end o f Septem ber show ed little change (in dollars) from those at the end o f A u gu st and w ere 14 per cent less than on Septem ber 30, 1946. _ 6 W H O L E S A L E P R I C E S IN Bureau of L abor Statistics (1926 = 100) Sept.,*47 A u g .,*47 A ll Commodities.— 157.4 153.6 Farm Products.... 186.4 181.7 Foods ................... 179.3 172.3 Other ................ .. 138.2 136.0 TH E U N IT E D Sept.,’ 46 124.0 154.3 131.9 112.2 STATES Compared with Sept.,’ 46 -4-26.9% 4-20.8 4-35.9 4-23.2 Sept.,’ 47 A u g .,’47 + 2 .5 % 4-2.6 4-4.1 4-1.6 R E T A IL F O O D P R IC E S Bureau o f Labor Statistics A u g. 15, July 15, A u g. 15, A u g. 15/47 Comp, with (1935-39 = 100) 1947 1947 _ 1946 July 15,’ 47 A u g. 1 5/4 6 U . S. (51 cities).. 196.5 193.1 171.2 4- 2% 4 -1 5 % St. L ouis.......... 205.0 200.9 175.5 4- 2 4-17 Little R ock ........ 195.1 193.6 167.8 4- 1 4-16 Louisville ....... 189.7 185.4 163.1 -i- 2 4-16 Memphis ......- 213.5 210.1 187.5 4- 2 4-14 C O N SU M E R P R IC E IN D E X Data on the local consum er price index will be available for Memphis and St. Louis only on a quarterly basis. This inform ation has been pub lished on a m onthly basis for St. L ouis, heretofore. Quarterly figures will be published in the next issue. B A N K IN G C H A N G E S IN P R IN C IP A L A S S E T S A N D L I A B I L I T I E S F E D E R A L R E S E R V E B A N K O F ST. L O U IS Change from O ct. 22, O ct. 23, Sept. 24, 1947 (I n thousands o f dollars) 1946 1947 Industrial advances under Sec. 13b....$ ............... $ ............ $ Other advances and rediscounts... 4- 5,116 4- *” 4” l24 — 37,102 4 - 67,041 — $ 31,986 4 -$ 62,917 699,544 Total deposits ................................... ... , F. R . notes in circulation................ ....... 1,121,840 Industrial commitments under Sec. 13b 580 — — — 24,601 34,459 20,848 - 0 - 444- _ 34,598 60,015 33,098 3,460 P R IN C IP A L A SSET S A N D L IA B IL IT IE S W E E K L Y R E P O R T IN G M E M B E R B A N K S (I n Thousands of D ollars) Change from O ct. 22, Sept. 24, O ct. 23, Assets 1947 1947 1946 T otal loans and investments........ * ......... $2,143,539 4~$ 77,1534~$ 1,705 __ Commercial, industrial, and agricultural loans, open market paper........ 556,539 4 81,30$ 4 - 150,990 Loans to brokers and dealers in se curities ......................... ............................ 5,459 4217 — 2,435 Other loans to purchase and carry securities ........................ ................. ....... 51,125 — 309 — 30,526 Real estate loans......................................... 137,016 4 1,272 4- 30,304 Loans to banks........................................... 3,956 -j477 4 .351 Other loans .................................................. 174,869 -j6,467 4 - 30,403 928,964 4 89,429 4 - 179,087 Total loans ..................... ....................... Treasury bills ........................................... 15,408 4 “ 7,294 — 12,847 Certificates of indebtedness.................... . 84,981 —• 6,859 — 53,642 Treasury notes ......................................... . 115,798 — 21,915 — 95,177 U . S. bonds including guaranteed obligations ........................... ......... ....... . 848,303 -f13,788 ■ — 20,854 Other securities .......... .................... ......... 150,085 — 4,584 4 5,138 Total investments ........ ........................ 1,214,575 — 12,276 — 177,382 Cash assets .......- ................................... 786,581 - f 80,158 4 - 79,403 Other assets ........................................ ....... 24,666 4 558 -j1,069 T otal assets ................................... ......... $2,954,786 — $157,869 j— 82,177 Demand deposits-—totai ................ $2,287,341 4 “$161,306 4 -$ 51,832 Individuals, partnerships, and corporations ............................................ .1,455,279 4 58,006 4" 128,241 Interbank demand deposits................. 674,405 -j94,824 4 U. S. Governm ent deposits................. 44,210 4 ^,023 — Other demand deposits....................... .. JJ^.447 4M 5 3 -j- 14>19<J Demand deposits—adjusted* ................. ' 2 ’ H ? 4" Time deposits ................................................................... 4 “** 'o 2 t Borrow ings ......... ........................... ............ 10,375 — 5,355 ■ 825 0?h e? liabilities ........... .................... . 15,925 - f 256 + 1,109 T otal capital accounts........................... ~.. 166,981 4573 46,937 Total liabilities and capital accounts....$2,954,786 4-$157,869 + $ 82,177 ♦Other than interbank and Governm ent deposits,less cash items on hand or in process o f collection. Page 131 B A N K IN G A N D FIN A N C E A G R IC U L T U R E A sharp rise in private credit highlighted changes in the con d ition o f district reportin g m em ber banks durin g the four-w eek period ending O ctober 15. T h e expansion in loans raised deposits o f the city banks w h ich also gained additional funds from their cou n try correspon dents. T ota l loans o f rep ortin g m em ber banks rose $71 m illion durin g the fou r-w eek period, all types o f loans and all rep ortin g centers registering some in crease. L oa n s to consum ers registered a very sharp gain in the fou r-w eek period, “ other loans” (m ostly consum er loan s) b ein g up $6 m illion as com pared to an average m on th ly rise for the past year of $2.5 m illion. R eal estate loans continued to rise also, but at a dim inished rate, the gain o f $1.4 m illion b ein g substantially b e lo w the average m onthly in crease o f $2.5 m illion durin g the past year. In vestm ents of rep ortin g m em ber banks co n tinued to decline as securities were liquidated to m eet the risin g dem and for loans and W a r L oan deposit w ithdraw als. A decrease of $33 m illion in investm ents from Septem ber 17 to O ctober 15, brou gh t rep ortin g bank security holdings $172 m il lion b elow the total o f a year ago. T h e liquidation con sisted largely o f sh ort term issues and tended to lengthen the average m aturity o f the investm ent p ortfolio. D u rin g the fou r-w eek period, deposits o f district w eekly rep ortin g banks registered an increase o f $155 m illion, b rin g in g the total to $2.8 billion— a gain o f $77 m illion over a year ago. T h e sharp rise in dem and deposits was due largely to the expan sion in business and agricultural loans and to the b uilding up o f cou n try bank balances. Cash farm incom e in the U nited States in 1947 will establish an all-tim e record. P resent indica tions are that gross farm in com e w ill be $34.3 b il lion, 19 per cent m ore than in 1946. P rodu ction expenses this year have been but 16 per cent higher than in 1946. N et incom e thus is forecast at $18 billion, 20 per cent h igher than a year earlier. Prices for n ext yea r’s crops are exp ected to rem ain high. W h e th e r or not farm incom e in 1948 w ill be higher than in 1947, h ow ever, w ill depend largely on the level o f crop and livestock p rodu ction . Prices o f grains, especially wheat, continued to dom inate the agricultural m arket new s in O ctober. D ecem ber wheat m oved w ell a bove $3.00 in the m onth. T ra d in g in n ext y ea r’s futures also was stron g as a result o f continued reports o f dry w eather in the southw estern w heat belt, w here planting already is delayed due to lack o f m oisture. T h e crop report based on O cto b e r 1 estim ates ga ve virtu ally no further encou ragem ent fo r larger grain supplies for the co m in g year. T h e corn crop w as estim ated on O cto b e r 1 at 2,459 m illion bushels, an increase o f on ly 56 m illion bushels from the esti mate a m onth earlier. T h is increase was largely offset b y low er-th an -exp ected supplies o f corn on hand from the 1946 crop. T h e forecast for cotton p rod u ction likew ise was disappointing. T o ta l p rod u ction for the nation is n ow estim ated at 11,508,000 bales, w hich is 341,000 bales, or 3 per cent, less than was anticipated on Septem ber 1. In E ighth D istrict states, the O cto b e r 1 estim ate was 6 per cent b e lo w that o f a m onth earlier. T o b a c c o p rod u ction estim ates w ere the same in O ctob er as in Septem ber. A G R IC U L T U R E D E B IT S T O D E P O S IT ACC O U N TS (I n thousands o f dollars) Sept., 1947 A u g., 1947 Sept., 1946 15,329 18,278 $ 17,785 $ E l D orado, A rk .......$ 31,118 32,344 37,226 F ort Smith, A rk ...5,969 7,600 5,191 Helena, A rk ............... 103,751 97,141 Little R ock, A rk ..... 121,009 24,399 18,950 Pine Bluff, A rk ....... 26,828 8,961 Texarkana, A rk.-T ex. 10,884 8,407 16,824 A lton , 111.................... 21,216 22,079 63,680 118,379 108,291 E .S t.L .-N a t.S .Y .,Ill. 20,949 24,092 Q u in cy, III................. 25,790 76,833 95,073 92,042 Evansville, 111...... .. 379,015 401,996 Louisville, K y .......... 427.781 20,046 20,242 O w ensboro, K y. ...... 22,113 13,890 Paducah, K y .............. 11,445 12,474 17,709 Greenville, M i s s . __ 11,344 14,210 Cape Giardeau, M o.... 9,329 8,908 8,061 6,878 6,614 H annibal, M o ............ 7,087 45,798 33,950 Jefferson City, M o. 43,983 St. Louis, M o ........ 1,355,116 1,214,503 1,214,001 9,692 8,614 Sedalia, M o ....... . 9,719 Springfield, M o ........ 59,820 54,211 52,014 Jackson, Tenn. ...... 14,338 13,578 16,455 M em phis, Tenn........ 3*8,437 423;395 368,731 T otals ...................$2,889,543 $2,552,236 $2,510,136 Page 132 CASH Sept., ’ 47 com p, with A u g., *47 Sept., ’46 4 - 3% 15 4-46 4-25 •4-42 4-29 4- 4 4- 9 4 -19% 4-20 4-27 4-17 4-10 4-21 4-31 4-86 4-56 4- 5 4* 3 4-30 4-12 - 04-10 4-15 4-25 4-23 4-24 4-13 4- 9 4-21 4-25 4-16 4- 7 — 4 4-12 4-13 4-15 4-21 4-15 4-13 4-15 4- ? 4- 3 4- 6 4-10 4-11 (I n thousands A u g., 1947 o f dollars) Arkansas ...... Illinois .......... .... 131,926 Indiana ........ .... 97,718 K entucky ...... .... 31,631 Mississippi ... ... 13,598 M issouri ...... .... 86,352 Tennessee .... 27,240 Totals ....... $405,759 R E C E IP T S AND FARM IN C O M E A u g., *47, com p, with A u g., J «iy . 1947 1946 — 24% - 0 -% — 29 4-18 — 17 4 -H — 18 4- 5 — 2 4- 2 — 18 4-17 —. 9 4-12 —21 % 4 -1 3 % 12 m onth total, Sept. to A ug., '4 6-’ 47 com p, with ’45-’46 ’44-'4S »46-*47 4 -32 % $ 472,015 4 -48 % 4-57 1,762,759 4-38 4-49 989,176 4-27 4-20 501,738 4-25 — 18 292,012 — 14 4-42 1,027,994 4-40 448,862 4-33 4-26 4 -37 % $5,494,556 4 -3 1 % S H IP M E N T S A T N A T IO N A L Sept. 1947 Cattle and calves.,220,907 H ogs ........... .........177,266 H orses ................... 852 Totals ....... .........482,236 Receipts Sept.’ 47 com p, with A u g .’ 47 Ser>t.’46 4 -3 9 % 4 - 61% 4-1317 4- 2 — 1 4 - 27 — 2 — 83 4 -1 6 % 4 - 119% STOCK YARDS Shipments Sept. Sept.’ 47 com p, with 1947 Aucr.*47 Sept. 46 96,265 4 -5 0 % — 12% 4-611 41,428 — 38 — 46 21,019 — 45 — 83 852 — 2 159,564 — 6% - 0 -% j