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Monthly Review
E
R
R
E
S
E
Volume X X X III
THE
SHOE INDUSTRY
AND
EIGHTH DISTRICT
DEVELOPMENT
R
V
E
B
A
N
K
NOVEMBER, 1951
O F
S
Number 11
Eighth District participation in national
economic expansion reflects in part the con-■
tinuing adaptation of district resources to
effective provision of goods and services for
other areas, important among these “ out
flows*'' of district commodities are the products of the shoe industry.
The input-output structure of the shoe
industry provides a basis for understanding
the history of the industry and the present
concentration of plants in this area. Con
trasted with the rest of the nation, district
shoe production displays certain differences
in output, distributive practices, inputs, and
plant size. In general these differences ac
crue to the advantage of the district.
The domestic market for shoes and the
foreign market do not promise rapid growth
prospects for the industry as a whole.
Nevertheless, the district shoe industry may
be expected to remain active and important
in further district development.
Eighth District participation in national econom ic
expansion . . •
During the decade 1940-50 the United States
experienced tremendous economic expansion. The
population grew by more than 20 million persons.
Unemployment was reduced to a virtual minimum.
Physical output of goods and services increased
over 50 per cent.
In that ten year period the nation was faced
with the task of repeated large-scale shifts in re
source use. It converted once to wartime output,
then went back to a predominantly civilian econ
omy, and then again shifted to a state of defense
mobilization. These shifts occasioned some major
economic problems (particularly inflationary prob
lems) but on the whole the transitions were rela
tively smooth, testifying to the flexibility and adapt
ability of our industrial plant and equipment and
our labor force as well as to the abundance and
variety of our resources.
As an integral part of the national economy, the
Eighth Federal Reserve District has contributed
its energies and resources to the national effort.*
The effectiveness of this contribution is reflected
in the development of the district economy during
this past decade. The $3.8 billion district income
in 1940 increased by 194 per cent to $11 billion in
1950. As a consequence the district’s share of na
tional income payments rose to 5.1 per cent. Per
capita income in the region in 1950 was $1,055.
Manufacturing payrolls grew by 234 per cent and
the proportion of total district income earned in
manufacturing industries rose from 15 per cent
in 1940 to 18 per cent in 1950. Thus the district
fully participated in the general expansion.
. . . reflects in part the continuing adaptation o f
district resources to effective provision o f
goods and services fo r other areas.
Ten and one-half million persons reside within
the boundaries of the Eighth District. Cut off from
all trade with the rest of the world these people
could not maintain existing levels of living. Func
tioning as a completely interdependent part of a
larger economy they are able by appropriate utiliza
tion of resources at their disposal to achieve an in
creasing standard of living. This pattern of resource
utilization in the district necessarily tends to change
over time as the structure and needs of the econ
omy as a whole undergo change. And as district re
sources become ever more effectively adapted to the
requirements of the nation, both district and nation
*This article is the first of a series of Eighth District industry studies
developed through input-output analysis. Tne lead article in the A u gust,
1951 R eview gave some background of theory and technique for such
analysis.
Page 154
benefit. That the district has participated so fully
in national income growth is evidence of the adapta
bility of district resources and the increasingly im
portant role played by these resources in the na
tional effort.
As an area experiences economic development the
nature of its interdependence with the rest of the
world undergoes change. An increasing standard of
living will be accompanied by an increasing volume
and variety of inflows of commodities and services—
to service and supply the growing productive plant
of the area as well as to supply consumers. Similarly
growing development will be recorded in a greater
volume and variety of outflows provided in ex
change. Thus this interdependence may be visual
ized as a two-way flow of commodities and services.
Important among these “ outflows” o f district com modities are the products o f the shoe indus
try.
Shoe manufacturing has long represented an
important link in the chain of interdependence
binding this area to the rest of the world. It serves
as an illustration of the importance of analyzing
district development in terms of its contribution
to a larger economy.
Shoe production in the United States for many
years has been concentrated in nine states whose
combined production currently accounts for almost
nine-tenths of annual shoe output. These states
(Maine, New Hampshire, Massachusetts, New
York, Pennsylvania, Ohio, Wisconsin, Illinois and
Missouri) combine into five major regional produc
ing centers: The New England area (about 30
per cent of total output), the New York area (about
17 per cent), the Pennsylvania-Ohio area (about
12 per cent), the Chicago-Wisconsin area (about 9
per cent), and the St. tou is area around which
Eighth District shoe production is centered (about
18 per cent).
Figures on district shoe production and consump
tion illustrate the “ export” nature of the district's
shoe industry. Estimated Eighth District expendi
ture on shoes in 1947 was about $91 million at
factory value (at retail value this consumption is
around $151 million). Shoe production in the dis
trict for the same year amounted to about $356
million. If district residents had consumed only
shoes manufactured in the area, the volume of shoe
outflows to the rest of the nation and the world
would have been $265 million or about 74 per
cent of the total value of products. In fact, of
course, a substantial volume of shoes sold in the
district was manufactured elsewhere, hence total
outflow of district manufactured shoes was some
what greater than 74 per cent of total production.
The input-output structure o f the shoe industry . . .
It is what we buy and sell outside the district
that links economically this area to other regions.
These inflows and outflows binding the area to
the rest of the economy are in reality inflows and
outflows to and from specific activities within the
area, namely, the industries and households. Just
as a knowledge of the important inflows and outflows
of goods and services to a region aid in isolating
those economic forces likely to have the greatest
impact oh the area, so does an analysis of the inputoutput structure of an industry aid in understand
ing its reaction to changing economic circumstances.
The inputs (purchases or cost items) and outputs
(products) are the links connecting the industry
to the rest of the economy and the lines of com
munication by which economic change is relayed
from industry to industry.
Chart I is a condensed picture of the inputoutput structure of the shoe industry. The most
important economic forces influencing the shoe in
dustry through its output connections with the
rest of the economy have been all of those forces
affecting household demand for shoes. Military
demand and foreign trade historically have been
relatively unimportant. On the input side, factors
affecting leather supply and labor input have had
the greatest impact on the shoe industry.
Chart I is a generalization for the entire shoe
industry; it depicts average relationships for the
industry as a whole. In actual fact, of course,
the importance of the various items varies both as
to kind of shoes (men's shoes, women's, etc.) and
as to type of shoe construction. As an obvious ex
ample, the proportion of women’s shoe output going
to the military is naturally much smaller than that
of men’s shoes, while the proportion of women’s
shoes going to foreign trade (exports) is larger
than that for men’s shoes. Similarly, labor input
items vary in importance among types of shoes
depending upon the level of skill required and the
number of manual operations. For all types and
kinds of shoes, however, the labor and leather in
puts are by far the most important input (or cost)
items. A considerable part of the history of the
shoe industry can be explained in terms of the
effort to effect savings on these particular cost items.
shoe manufacturing in order to minimize these
costs. While other cost items are of some import
ance, and other things being equal may influence
a locational decision the historical economic forces
operating on the shoe industry via the labor and
leather inputs seem to have played the major role.
During the latter half of the nineteeth century
several important developments occurred in the
shoe industry, in allied industries, and in the econ
omy as a whole that were of great significance for
the growth of shoe manufacturing in this district.
Prior to 1860 and the invention of shoe machinery
the labor input for shoe manufacturing consisted
largely of skilled labor, with some apprentice labor
specializing in making parts of shoes. Shoe manu
facturing was not yet concentrated in factories
and much labor was performed in the home as a
spare time occupation. Shoe production was almost
completely concentrated in New England, partic
ularly Massachusetts. The leather input came
largely from East Coast sources where the supply
of organic tanning materials, derived largely from
hemlock, oak, and chestnut bark, was still adequate.
Hide imports from Europe were handled chiefly
at New York and Boston. The market for the
industry’s output was also concentrated along the
East Coast and was accessible for the most part
through cheap water transportation.
The growth of railroads in the Midwest opened
vast new areas for settlement and gave impetus to
an already strong westward population movement.
This development affected the shoe industry via its
output relationships with the rest of the economy.
The expanding market in the W est produced a
growing attraction for new industry. A t the same
time the reduction in cost of overland transf>ortaCHART I
Leather and
in p u t s ___
labor
. . . provides a basis fo r understanding the history
o f the industry . . .
V//Al a b o r
The fact that there are two major cost items,
labor and leather, has led to locational shifts in
□
principal
U. S. civillon
of output
major consumer
|LE A TH E R
CAPITAL SERVICES
OTHER
Page 155
tion of the finished product and the absence of a
supply of skilled labor prevented any large-scale
attempt to reduce input cost by shifting operations
to the W est at that time.
The invention of shoe machinery in 1860 marked
the beginning of the transition of shoe manufactur
ing from a craft industry to an assembling industry.
Shoe machinery enabled the substitution of un
skilled labor inputs for higher priced skilled labor
in a number of important processes. There was a
growing supply of unskilled labor in the expanding
West. This substitution permitted a reduction in
shoe prices and a consequent expansion of the
market, particularly for cheap shoes. Technological
change thus enabled the resources of the growing
area to be adapted to new uses. The pattern of the
area’s interdependence was changing.
At about the same time the supply of tanning
material in the East was becoming depleted, forcing
leather tanners westward into new forest areas and
increasing the cost of the leather input to Eastern
shoe producers. The Midwest was becoming an
increasingly important source of hide supplies, a
factor further reducing the cost of the leather input
to Midwestern manufacturers.
The development of new tanning processes in
the latter part of the nineteeth century, such as
the use of quebracho extract and non-organic
agents, liberated the tanning industry from its de
pendence on local forest products and encouraged a
shift in hide tanning toward the stockyard cities
of the. Midwest. Thus, technological change in an
industry supplying one of its inputs also encouraged
the westward shift of the shoe industry.
The first shoe manufacturing plant in St. Louis
was established in 1870. By 1900 Missouri and
Illinois together were producing 6.6 per cent of
total shoe output. The output, however, was dis
tinctly different in quality from Eastern production.
Midwestern producers specialized in heavier work
shoes and inexpensive shoes, partly because of the
nature of the local market and partly because of the
unskilled quality of their labor.
A s the nation continued its rapid industrial ex
pansion, certain other forces encouraged the growth
of shoe manufacturing in the Middle West. The
large industrial areas of the East with their avail
able supply of skilled labor were strongly attractive
to new high-productivity manufacturing industries
and the pressure on wage levels was steadily up
ward. The development of shoe machinery had
given the industry considerable mobility, both be
cause of the system of leasing machinery on a
royalty basis made capital requirements .low and
Page 156
new entry relatively easy and because of reduced de
pendence on the presence of a skilled labor supply.
TABLE
M ID W E S T
1
P R O D U C E S IN C R E A S IN G
N A T I O N 'S O U T P U T
SH ARE
OP
Shoe Production
Percentage
Distribution
by States
1899
1909
1919
1929
1939
1949
M assachusetts .....................
M a i n e ______________________
N ew Hampshire ................
N ew Y o rk _______________
Ohio -----------------------------------Pennsylvania .......................
Illinois _______ ______ .._____
M issouri .................................
W isconsin ...............................
Other States -------------------...
United States .......................
45.5
4.8
9.0
9.9
6.9
5.1
3.6
4.4
1.8
9 .2
100.0
46.1
3.0
7.7
9.4
6.2
3.9
3.3
9.5
2.7
8.2
100.0
38.3
4.2
6.4
16.5
6.2
5.7
3.4
9.5
3.8
6.0
100.0
2 5 .0
4.0
6.9
19.6
5.3
4.3
7.6
13.8
5.7
7.8
100.0
1 9.5
6.8
9.0
16.6
4.1
7.7
7.5
11.5
3.9
13.4
100.0
17.0
6.0
8.0
18.0
4.0
8.0
7.0
14.0
4.0
14.0
100.0
The development of better means of transportation,
faster rail service and the advent of trucks, made
possible large shipments over long distances at
relatively low rates. These developments were re
flected in the shift of shoe manufacturing out of
urban areas to rural areas where wage levels were
lower. The shift to the Midwest after 1900 was
largely of this nature. In 1900 approximately 73
per cent of the shoe production in Missouri was
located in St. Louis. By 1933 the establishment
of new plants in rural areas had reduced this pro
portion to 23 per cent.
• . . and the present concentration o f plants in this
area .
Already noted is the fact that one of the major
shoe producing areas of the country is centered
around St. Louis. According to the last Census of
Manufacturers, over 140 plants, employing a total
of 47,000 persons, are located in the Eighth District.
Some indication of the relative specialization of the
area’s resources in shoe production is indicated
by the fact that 7 per cent of district manufacturing
employment is accounted for by shoe production,
while only 1.6 per cent of all manufacturing employ
ment in the nation is so engaged. O f all manufac
turing employees in the nation in 1947, only 4.5 per
cent were residents of the district, whereas 21 per
cent of shoe manufacturing employment was here.
W ages and salaries paid to shoe workers in this
district totaled $92 million in 1947, or 19 per cent
of all wages and salaries in the industry.
Contrasted with the rest o f the nation9 district shoe
production displays important differences in
output . . •
The current output of the district shoe industry
differs considerably from that of the early years
of its development. Previous specialization in cheap
and heavy shoes has given way to a tendency to
produce relatively expensive shoes. The average
value per pair of shoes produced in this area is about
32 per cent greater than that for shoes produced
elsewhere. In the first quarter of 1951 Illinois and
Missouri together produced about 18 per cent of the
total pairs of shoes made in the nation, but about
23 per cent of the total value. The higher price and
quality shoes produced in Missouri are mostly from
the St. Louis area proper; the rural plants tend to
concentrate on lower quality shoes. Massachusetts*
early specialization in quality shoes yielded during
the ’thirties to the production of popular priced
and inexpensive shoes. Average price per pair is
the highest for shoes produced in W isconsin; New
York produces the cheapest shoes on the average.
O f the total number of shoe plants located in
the district, over 65 per cent are situated in Mis
souri. O f these, more than half are engaged en
tirely in the production of women’s shoes, about 16
per cent specialize in men’s shoes, 11 per cent pro
duce misses’ and children’s shoes, 8 per cent youths'
and boys’; shoes, and 8 per cent are general line
plants. The remainder produce infants’ shoes and
other types. For the nation as a whole, the cor
responding percentages are 35 per cent women’s,
16 per cent men’s, 9 per cent misses’ and children’s,
3 per cent youths’ and boys’, and 16 per cent general line.
T A BL E 2
SHOE INDU STR Y DISPLAYS REGIONAL SPECIALIZATION . . .
(Percentage State and
National Shoe Output
u/ j\uiu;
Mens
Illinois ................
Maine ......................
Massachusetts ...___
Missouri .....................
New Hampshire ---New York ........ -----Pennsylvania ...........
Wisconsin _____ ......
Other States —
United States ....
20.6
34.2
33.7
36.4
27.1
11.9
65.4
25.8
Youths and
Misses and
Boys Womens Childrens Other
4.1
0.9
2.5
5.9
3.8
5.1
3.8
2.4
1.8
3.5
27.9
62.4
42.8
44.1
52.5
20.9
27.5
14.7
44.1
37.6
33.0
13.2
18.4
7.4
5.2
34.4
35.4
5.5
20.2
20.8
11.5
2.9
2.1
8.9
2.1
12.5
21.4
12.0
8.1
8.5
Total
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
. . . AND CONCENTRATION
Percentage
of United States
No. of
Production Plants
United States ___
District ................
New York ______
Massachusetts ......
Missouri ................
New Hampshire....
100
21
13
17
14
8
100
11
19
26
9
5
Percentage
of United States
No. of
Production Plants
PennsyJvimia .......
Illinois .......... .......
Maine ........... -----Ohio ..............
Wisconsin ....-----Other States .......
8
7
6
4
14
4
5
3
4
17
Table 2 indicates the relative proportions of the
various kinds of shoes produced by each of the
nine leading states and by the nation as a whole in
1942. Each state showed a tendency to specialize
in production of certain kinds of shoes and in some
the specialization was pronounced. Missouri pro
duction emphasized both men’s and women’s shoes.
CHART II
Higher average
in Missouri
factory value
.... reflects output pattern,
. . . distributive practices . . .
Following W orld W ar I the distribution of shoes
through wholesalers and jobbers largely was re
placed by distribution direct to retail outlets. In
creasing importance of and unpredictable changes
in style, plus growing product differentiation in a
highly competitive industry, laid stress on the im
portance of quick and direct access to the market.
By 1935 the once important wholesale channels ac
counted for only 4.6 per cent of total manufacturers’
sales.
Associated with these tendencies was a con
sequent increase in the sensitivity of manufacturing
output to consumer sales. The risk of substantial
inventory loss due to a sudden style change in
creased the seasonal fluctuations in the industry,
particularly in the production of women’s shoes.
These pressures on manufacturers gave rise to two
tendencies which became particularly strong during
the ’thirties. First, many manufacturers combined
with large distributors, and second, chain stores,
mail order houses, and department stores became
the most important outlets for shoe distribution.
These developments were largely at the expense of
independent retail stores.
Distributive practices for shoe manufacturers in
the district differ somewhat from those for the rest
of the nation. Most of the modern large-scale dis
tributive techniques were initiated and developed
by larger firms to whom national distribution is
important for the maintenance of a sales volume
requiring multiple plant operation. Such firms are
relatively more concentrated in this area than in
the East. The result is that there are more plants
in the district producing factory brands and dis
tributing through owned chain outlets or independ
ent chains than in the East.
Page 157
Ixi 1950, five out of the six leading women’s shoe
advertisers, four out of ten leading men’s adver
tisers, and the first five children’s advertisers were
St. Louis branded lines. Nearly half of the branded
lines made in this country are manufactured in this
area. This feature of local shoe distribution holds
important implications for the stability of the in
dustry in this area, and will be discussed at a later
point.
. . . inputs . . .
The most important differences in inputs (costs)
between the local shoe industry and shoe manu
facturing in other areas seem to be those occasioned
by differences in wage rates. While precise com
parisons are difficult to make since wage rates
vary widely among employees in the same plant
and among plants in the same area, general indica
tions are that district wage rates are somewhat
lower than those for comparable occupations in
other areas. For example, analysis of wages for 23
different occupations in women’s shoe manufactur
ing showed that hourly earnings in the district were
the lowest among the principal shoe producing
regions. W age rates in the St. Louis area proper
were somewhat higher than in the rest of the dis
trict, however. This reflects in part alternative
employment possibilities, in part the higher degree
of skills found in the city, and in part the higher
cost of living in a metropolitan area.
Lower wage rates, of course, do not necessarily
mean lower labor costs. The combination of wage
rates and labor productivity must be considered in
this connection. Evidence that lower wage rates
in the area do not imply lower than average pro
ductivity tends to be shown by the fact that wage
costs as a per cent of total costs are lower in the
district than for the nation as a whole. For the
entire shoe industry the labor input cost as a per
cent of total value of output is roughly 29 per cent.
For this region the equivalent ratio is in the neigh
borhood of 26 per cent.
The cost of the leather input as a per cent of
total value of output is somewhat higher for the
shoe industry in this district than the national
average, 45 per cent as against 43 per cent. Generally^ speaking, this may be attributed to regional
differences in the product mix—types and kinds of
shoes produced.
Transportation charges on leather are relatively
small, averaging only about 1.18 per cent of the
wholesale value at destination for all rail shipments
in 1941. W{iile subsequent alterations in rate struc
ture relative to leather prices may have changed
Page, J 58
this figure somewhat, the differential isn transporta
tion charges for this area as against other areas
still is not substantial.
The out-of-pocket expense of machinery to the
user is not differentiated on a regional basis. As
noted, shoe machinery generally is leased to manu
facturers. T o a large extent these machinery charges
represent variable costs to the industry since the
lease arrangement is usually on a royalty or per
unit-of-output basis. T o the degree that machines
may be more effectively utilized in one area than in
another, however, there may be some variation in
machinery costs.
Power rates in general are lower in this area
than in other shoe producing centers, particularly
relative to those in New England. This fact largely
explains a lower ratio of electricity; costs •to value
of output for producers in the district. However,
since total electricity charges represent less than
y2 of 1 per cent of value of output, a differential
in this cost item is not significant in itself. The
input ratio of electricity value to total value of out
put in this area is about half of the industrywide
average.
CHART III
Shoe
plants
la rg e r
concentrated
In
Average
th a n
average
industry . . . .
m id -w e s t.
number
of
employee*
per plant
. . . and plant size.
The shoe industry has displayed a marked long
run trend toward an increasing size of plant, as
measured by employees per plant. In 1900 the
average number of workers per plant was about
90. In 1947 the average establishment employed
about 178 persons. Chart III compares the average
size of plant in the shoe industry with that for all
other industries, and indicates that the average shoe
manufacturing plant tends to run larger than the
average plant for all manufacturing combined.
There are, however, important regional differ
ences in plant size. Newer plants tend to be larger
than older plants. Thus areas most recently at
tractive to the industry tend to have larger size
plants. Chart III contrasts the average size of plant
in the important producing states in 1947. It is
clearly evident that the states with a younger
age distribution of plants have significantly larger
establishments. In Missouri the average plant em
ployed 315 persons; in Illinois, 342. For the Eighth
District as a whole there were about 330 people
at work in an average shoe plant.
In general these differences accrue to the advan
tage o f the district.
The characteristic features of the district shoe
industry have been noted a s : (1) on the output side
—higher-than-average price and quality shoes,
greater concentration in women's shoes, and larger
scale distributive techniques; and (2) on the input
side— lower-than-average labor and power costs,
higher leather costs, and larger plant size. They
contain in sum certain implications for the outlook
for district shoe producers. On the debit side of
the account the specialization in relatively expensive
shoes and in quality women's shoes makes district
shoe production sensitive to style change and intro
duces a tendency toward strong seasonal fluctua
tions into the output rate. In addition the higherthan-average price per pair makes for sensitivity
to any consumer shift to lower price shoes.
Sincd the first quarter of this year the shoe
industry.as a whole has suffered from some soften
ing in the market. The national index of shoe pro
duction has gone off since January with output
down about 3 per cent from last year’s level. Dis
trict production as a percentage of national produc
tion has, declined, largely due to the more severe
effects of the slack market on district producers
than on those in other areas. Commonly associated
with ari over-all decline in shoe expenditures is a
marked shift to lower price and lower quality
shoes, particularly in women's shoes. Under exist
ing circumstances this may well be only a relatively
short run phenomenon. If national income con
tinues to rise and with it, real income, a strengthen
ing of the market may be expected. In a stable high
level economy the district product mix is well
adapted to serve the rest of the nation.
On the credit side there are a number of favorable
aspects which encourage belief in the long-run
stability of the district shoe industry. Because of
the central geographic location, shoe manufacturers
located in the district enjoy a favorable freight cost
differential on the finished product over other areas
to the East, particularly New England, in serving
a national market. The advantage is further height
ened as the consuming market shifts further West.
In contrast with eastern production centers, dis
trict production is dominated by large-scale multi
plant manufacturers. Past experience has indicated
that such firms generally fare better during shortrun recessions than the smaller firms. The shoe
industry is characteristically a highly competitive
industry. Relatively low capital requirements en
courage an unusual degree of freedom of entry.
The result is a great many small firms, in some
cases dangerously undercapitalized, competing for a
relatively small share of the total shoe business. In
an industry where frequently over half of the firms
engaged in production report losses, such small
firms add a strong element of potential instability.
Experience has also shown somewhat more sta
bility of operation on the part of those firms pro
ducing factory brands, producing for stock, pnd
selling through chain stores. These operations are
all characteristic of large firms and again more char
acteristic of district operations than of operations
for the country as a whole. Such factors aid in off
setting the sharply seasonal nature of quality
women’s shoe production. District shoe production
actually shows less seasonal variation than the shoe
industry as a whole.
CHART IV
Reduced
seasonal
d is tric t output.
fluctuations
characterize
120
120
110
IIO
100
I 00
90
90
80
80
70
_
60
DEC.
Page 159
The larger average size of plant in the district
is nearer to the optimum size plant than the average
size for the nation as a whole. In general this means
more efficient operations, lower costs, and a better
competitive position for district producers.
As industrial development in the district con
tinues and income from manufacturing grows, the
wage rate differential between urban areas and
metropolitan centers in this district and similar
areas in other parts of the country may be expected
to decrease. However, since many of the shoe
plants in this area are located in rural surroundings
where the primary alternative source of employ
ment is in agriculture, the disappearance of the
existing wage differential may be very gradual.
On balance it would appear that the structure
of the district shoe industry is well adapted to dis
trict resources, and that the industry will continue
to distribute effectively the products of district re
sources to other areas. The question remains, how
ever, what is the role of the industry in future eco
nomic development for this area? Can any sig
nificant expansion of shoe output in this area be
anticipated ?
10 per cent. The balance of the gain reflected pop
ulation increase. Thus, while both increased per
capita consumption and increased population are
important factors in domestic demand for shoes,
the major expansive element has been population
growth.
During the war years total military expenditures
on shoes never accounted for more than 11 per
cent of total shoe production. The combined pur
chases of the armed services over the four year
period 1942 through 1945 totaled about 9 per cent
of production. Current military purchases of shoes
amount to about 3 per cent of total output,
Thus there seems to be little likelihood of greaterthan-average expansion of the domestic shoe market
in the foreseeable future. Per capita consumption
changes slowly. There should be increases from
continued population gain, but the relative gjiowth
of the shoe industry is not likely to be fcapid. As
real income increases, however, there may. be an
increasing shift to higher quality shoes. And at
the same time it is important to note that a con
tinued period of high level output for the national
economy is likely to insure a more stable market
than has been the case in the past.
T h e d o m e s tic m ark et, f o r s h o e s . . .
Total shoe production in the nation in 1950 (485
million pairs) was about one-third greater than
output (361 million pairs) in 1929. Peak produc
tion (529 million pairs) in 1946 was 57 per cent
more than in 1929. In contrast total industrial
output in the United States in 1950 was up 82 per
cent from 1929. Over the 21 year period, per
capita consumption of shoes in the United States
increased from 2.9 pairs to 3.2 pairs per year, about
CHART V
Shoe expenditures move with population-----Per Capita Shoe Consumption (Poirs)
5 ----------------------------------------------------
___ and
national
are a slightly
income.
Page 160
declining
portion
of
. . . a n d th e f o r e i g n m a rk et . • .
American shoe exports have never constituted an
important market for the shoe industry as a whole.
In 1950 exports amounted to only 2.5 per cent of
total domestic production and this was four times
the proportion exported in 1938. Exports reached
unusually high levels during the war and immediate
postwar years as American shoe producers were
called upon to supply markets usually supplied by
foreign producers. There were 13.3 million pairs
of shoes exported in 1946. By 1950 this figure had
declined to around 3.7 million pairs. As foreign pro
duction continues to grow, European producers
continue to recover their prewar markets. And as
an increasing number of countries impose restric
tions on shoe imports, total United States exports
seem likely to get smaller rather than larger.
The shifts in the pattern of American exports
which have taken place since 1939 are of particular
significance for this area. Prior to W orld W ar II
the leading markets for United States shoe ex
ports were the United Kingdom, Canada, and Cuba.
These three countries accounted for 60> per: cent
of the maijcet for shoe exports from this country.
During the war years the Netherlands, tLS.S.R.,
and Belgium-Luxembourg were the principal im
porters of American shoes In 1950, following five
years of European recovery, the principal tjiarkets
for American shoe exports were in the Western
Hemisphere, rather than in Europe.
Table 3 illustrates the shifts that have taken
place. It is interesting to note that there is prac
tically no market for American shoes in South
America, but a fairly substantial market in the
Central American countries and Mexico. It is this
group of nations whose demand for United States
shoes is likely to be of particular importance to
producers in this area. In this respect, even though
total shoe exports have not increased significantly,
the shift in markets has increased the importance of
foreign trade for this area. Also important is the
fact that women’s shoes dominate the export trade,
accounting for 54 per cent of shoe exports in 1950.
Imports of foreign shoes into the United States
are also of little importance to the industry as a
whole, amounting to only 1.6 per cent of domestic
production in 1938 and 1.3 per cent in 1950. These
imports consi3t principally of low-priced low-quality
women’s shoes. By and large they offer little
American market competition for shoes produced in
this area. The number of pairs of shoes exported in
1950 was only about 60 per cent of the volume of
shoes imported, yet the value of exports was 30
per cent greater than the total value of imports.
of the industry. Marked acceleration in .demand
and output is not anticipated, but the industry
should look forward to a steady growth paralleling
or even exceeding slightly the rate of population
growth. And unlike many mature industries, it
runs small risk of being supplanted by newer in
dustries or made completely obsolete by technolog
ical change.
Nevertheless9 the district shoe industry can be ex
pected to remain active and important in
further district development.
In historical retrospect, the shoe industry, like
many other light manufacturing industries, has
played an important role in the economic develop
ment of underdeveloped areas. It is no accident that
the shoe industry was one of the earliest manufac
turing industries to be established in this region,
that it was one of the first manufacturing industries
established in the budding industrial nations of
Eastern Europe in the interwar period, or that the
rapidly growing South American nations are; care
fully nurturing the development of domestic shoe
industries as are many other nations on the thresh
old of economic development.
The primary resource of a newly developing area
is an abundant supply of able, potentially produc
tive, but untrained labor. As a mechanized industry
with low capital requirements and relatively lowskilled labor needs, the shoe industry is ideally
adapted to the utilization of such a resource. The
. . . do not promise rapid growth for the industry
as a whole.
This brief survey of the market for American
shoe production serves to indicate the mature nature
TABLE 3
C H A N G IN G
PATTERN
OF W ORLD
TRADE
1938
Country
United K ingdom ...................................
Canada ......................................................
Cuba .................................................... .......
U nion South Africa...............................
Netherlands W e s t Indies................ .
Philippine Republic ............................
Panama Canal Zone...............................
Newfoundland-Labrador -------------- Bermuda ~.........— ---------------------------- M exico ..............- ......................................
Total E x p o rts:
in pairs
...................................
in dollars ......................................
Percent,
total value
U .S . Exports
31.7
17.6
10.2
8.2
6.4
6.1
4.8
3.3
2.8
2.3
Total imports :
in pairs ..— ..— .......................
m dollars ........... .......................
SH OE
2,308,614
4,391,000
Country
Netherlands .............................................
U . S. S. R .......... .....................................
B elgium -Luxem bourg .........................
Canada ........................................................
Philippine Republic ............................
Yugoslavia ...............................................
Greece ..............................................___ _
Panama Canal Zone.— ........................
M exico ......................................................
Poland-D anzig ........................................
Total E x p o rts :
in pairs ........................................ 13,355,384
in dollars ---------------- ------------ 41,470,000
IN
1.1
.9
.7
6,292,299
3,977*299
M ARKETS
Percent,
total value
U .S . Exports
Country
19.5
Cuba .................................................
17.2
N orth Antilles .............................
15.4
Canada ............................................
4.8
Canal Zone ..................................
4 .2
Philippine Republic .................
3.9
M exico ............................................
3 .8
Venezuela .................................
3.7
Panama Republic ......................
3.5
Greece ..............................................
2.9
Dom inican Republic ...... ..........
Total E x p o rts:
in pairs ........................................
3,714,470
in dollars ................................... 12,535,000
S O U R C E S O F IM P O R T S
1950
1946
Percent,
total value
U .S . Imports
57.9
10.9
7.3
4.8
4.4
3.9
2.5
1.7
EXPORT
1950
Percent,
total value
U .S . Exports
1.5.6
12.3
12.0
7.1
6.6
5.9
5-0
4.2
2.4
2.4
. . . AND
Czechoslovakia .........
United K in gdom ....
M exico .............____
Italy ........................
Switzerland - __ ......
Japan ......----------- -----H ungary ....---------.....
Netherlands ........... ..
Belgium _______ ......
China ----------------------Canada
------......—
IN
1946
1938
Country
REFLECTED
Percent,
total value
U .S . Imports
39.0
27.6
13.2
7.1
4.8
4.2
2.1
.6
.4
.3
J2
Country
M exico ......................................................
Argentina ....... ...................................... ..
Canada ....................... .............................
Switzerland ............................................
Cuba ......... ............................................... .
H aiti .........................................— ____....
United K in gdom .......... ........................
Brazil .........................................................
Belgium -Luxem bourg .......................
U ruguay ..................................................
C h i n a ______ ______ ____________ _______
T otal im ports:
in pairs .......................................
7,185,744
in dollars .................................. 17,270,530
Percent,
total value
Country
U .S . Im ports
United K in gdom ....................................
32.7
Canada ............................... ......................
13.7
M exico ................................................... ..
10.0
Switzerland ..................... .......... ...............
7.4
Czechoslovakia ......................................
7.1
Japan ............................................. ..............
5.9
H aiti ...................... — ------ ....................
3.9
Ita ly ................................................... .
2.4
Australia ...................... « ....,............ .
1.9
China ............................................................
t .4
R elgium -Luxem bourg ............ ..........
1.1
Total im ports:
in pairs
.......... .......................... 6,088,740
in dollars .................................... 9,378,959
Page 161
location of a shoe plant in a developing area affords
more productive employment for a labor supply
drawn largely from agricultural pursuits, raises in
comes, trains labor in machine technology, and pro
vides a foundation for further economic develop
ment. Characteristically this subsequent develop
ment forces decentralization of the industry into
newer underdeveloped areas where the process
tends to be repeated. The continuing shift of shoe
plants out of the metropolitan areas in this and other
areas, an example of this tendency, holds important
implications for district development.
It is doubtful whether any significant increase in
the district share of total shoe production can be
anticipated. Chart V I indicates that shoe production
in this area as a per cent of total shoe production is
leveling off from a peak of 21 per cent in 1947 to
something in the neighborhood of 19 per cent. The
rapid increase in the share that occurred in the
'twenties is not likely to be repeated again, asso
ciated as this growth was with the rapid develop
ment of highway transportation, a westward shift
of the market, and the vastly increased importance
of style following W orld W ar I. It should be noted
that increase in the district's share of total shoe
production was accompanied by the absolute de
cline of production located in the East rather than
with a particularly rapid expansion in total shoe
output.
However, the role of the shoe industry in the
economic development of the district does not lie
CHART VI
District
a
major shoe producing
center.
necessarily in the attraction of an increasing share
of total shoe output to this region. It lies primarily
in its role as an agent to maintain and increase the
income levels in the nonurban sections of the dis
trict. Studies of small area income levels made bv
this Bank have revealed the extent to which districtwide income measures obscure the fact that
many parts of the region are underdeveloped.
The shoe industry provides one avenue by which
the economic development and the changing inter
dependence of the district with the rest of the nation
are channeled to the smaller communities.
Guy Freutel
Survey of Current Conditions
At mid-October the district economy, like the
national economy, continued to hold in a state of
uneasy balance. Industrial output was slightly
higher than in late summer, partly reflecting sea
sonal factors, partly expanding defense activity.
The letter factor, however, was not operating as
strongly in this region as elsewhere since the dis
trict’s share of defense contracts is still small rela
tive to its industrial capacity. Employment was
holding steady, retail sales were up (seasonally) a
little.
These district experiences fairly well paralleled
those for the nation as a whole. The Federal Re
serve index of industrial production (adjusted) in
September was 219 per cent of 1935-39, up just two
points from August. September nonagricultural em
ployment dropped slightly as students returned to
school, but unemployment showed practically no
change. Sales in the nation showed results similar
to those in the district.
The state of balance, described as “ uneasy” , in
the economy at present implies that the future may
see activity levels either rising or declining from
those currently prevailing. The major factor which
could lead to a rising trend is the defense program,
if it continues to grow as projected. Future Govern
ment expenditures are expected to be considerably
higher than current expenditures. Growing defense
activity would indicate continued high and perhaps
growing levels of employment and production. In
turn these would mean continued high or growing
income.
A major factor on the other side is the continued
high level of saving on the part of consumers and
the consequent failure of consumer spending to
show the gains which might be expected to accom
pany income growth. Limitations on certain types
of civilian goods, particularly housing and durables,
could operate to increase the volume of savings rela
tive to income. Bank loans have been showing a
smaller increase than occurred in the like period
last year and interest rates have strengthened.
The strength of either of these major factors de
pends to a very marked degree upon the influence
of forces external to the district and, in fact, ex
ternal to the nation. In other words, developments
outside the district and outside the nation as a
who,le probably will be decisive in directing district
business activity up or down from its present bal
anced, state during the next few months.
EM P LO YM E N T
- The number of persons employed in nonagricul
tural industries, after allowances for seasonal fluctu
ations, has shown little change over the past six
months. With the return of student workers to
school, employment decreased as usual in Septem
ber, primarily in non-agricultural industries. H ow
ever, the number of jobless in September remained
close to the postwar minimum of 1.6 million per
sons.
Manpower has been in adequate supply generally.
There have been very few lags in defense produc
tion resulting from manpower shortages which have
developed in only a few localities, industries, and
occupations. The six major labor market areas in
this district (St. Louis, Louisville, Memphis, Little
Rock, Evansville, and Springfield) were classified
as having moderate labor surpluses in September,
the same as in July. T w o smaller areas (Crab Or
chard, Illinois, and Vincennes, Indiana) were conPRICES
W H O L E S A L E P R IC E S IN T H E U N IT E D S T A T E S
Bureau of Labor
,
$ep t., 1951
Statistics
compared with
(1 9 2 6 = 1 0 0 )
S e p t ./51
A u g ./5 1
Sept.,*50
A u g ./5 1
Sept.,’ 50
A ll Commodities....
177.6
178.0
169.5
— 0 .2 %
+ 4 .8 %
Farm Products...
189.2
190.6
180.4
— 0.7
+ 4.9
Foods.....................
188.0
187.3
177.2
+ 0.4
+ 6.1
O ther................. .
166.9
167.3
159.2
— 0.2
+ 4.8
C O N S U M E R P R IC E I N D E X *
Bureau of Labor
Sept. 15, 1951
Statistics
Sept. 15, June 15,
Sept. 15,
compared with
( 1 9 3 5 -3 9 = 1 0 0 )
1951
1951
1950
June 15,*51
Sept. 1 5 /5 0
United States.......... 186.6
185.2
174.6
+ 0 .8 %
+ 6 .9 %
St. Louis...............186.2
185.0
174.0
+ 0.6 + 7.0
M em phis............... 189.9
187.8
179.2
+ 1.1 + 6.0
*N ew series.
R E T A IL
FOOD*
Bureau of Labor
Sept. 15, 1951
Statistics
Sept. 15, A u g . 15,
Sept. 15,
compared with
(1 9 3 5 -3 9 = 1 0 0 )
1951
1951
1950
A u g . 1 5 /5 1
Sept. 1 5 /5 0
U . S, (51 citie s).....227.3
227.0
2 1 0 .0
+ 0 .1 %
+ 8 .2 %
St. Louis________238.8
237.2
220.4
+ 0.7 + 8.3
Little R o c k -.----- 223.0
222.9
211.5
- 0 - + 5.4
Louisville.............2 1 5 .6
214.8
199.4
+ 0.4 + 8.1
M em phis...............237.4
234.7
221.5
+ 1.2 + 7.2
*N ew series.
W H O LE SA LIN G
N et Sales
Line of Commodities
Sept., 1951
Data furnished by
compared with
Bureau of Census
A u g ./5 1
S e p t./5 0
U .S . Dept, of Commerce*
+ 1%
Automotive Supplies.............. ..... — 1%
+ 2
—
19
D ry Goods....... ................................ — 15
+ 1
— 17
Hardware........... ........................
- 0Tobacco and its Products.... ...... — 7
+ 1
— 12%
**T otal A ll Lines................ ..... — 8 %
. Stocks
Sept. 3 0 ,1 9 5 1
compared with
Sept. 30, 1950
+25%
+ *9*‘ "
— 9
+42
+ 8
+32
+ 27%
* Preliminary.
**Includes certain items not listed above.
Page 163
sidered to have substantial labor surpluses in Sep
tember.
One indication of the general sufficiency of man
power resources in this district is shown by the fact
that the construction of the Atomic Energy Com
mission plant and the two allied electric generating
plants in the Paducah area have progressed so far
without a serious labor shortage. Approximately
17,000 workers, primarily in construction, are now
employed on the three projects, and the peak em
ployment to be reached in December is expected to
be about 20,000 persons.
In the St. Louis area employment increased dur
ing September in defense plants and retail trade es
tablishments but these gains were offset by layoffs
in construction, apparel manufacturing, shoe plants,
and automobile assembly and parts plants. Total
nonagricultural employment was unchanged from
August but was up 2 per cent over the September,
1950, level. Opening of new branch department
stores has added to the normal seasonal increase in
trade employment.
Employment in Louisville remained close to the
peak attained in June. However, manufacturing em
ployment was down about 8 per cent from the maxi
mum reached last winter. Layoffs in textiles, metal
working, wood working, and trade and service es
tablishments have occurred in the past two months.
However, additional workers were needed by to
bacco firms, construction, railroad shops, and gov
ernmental ordnance establishments. The increased
employment in construction and defense-connected
government establishments nearly iabsorbed the lay
offs in manufacturing.
IN D U S T R Y
( K . W .H .
in thous.)
C O N S U M P T IO N O F E L E C T R IC IT Y
•
Sept., 1951
Sept., 1951 A u g ., 1951 Sept, 1950
compared with
K .W .jK ,
K .W . H ,
K .W .H .
A u g .,*51
Sept.,*50
Evansville___
Little Rock..„
Louisville.___
M em phis____
Pine B luff.....
St. L ou is.......
15,058
1 2 ,2 $ 6
82,540
30,891
10,103
101,059
Totals_____ 251,887
.
Revised.
17,186
13,277r
12,217
10,306*
86,241
73,993
29,681
25,321
10,103 7,348
108,377
96,016r
263,805
— 12.4 %
+ 0.2
— * 4.3
+ 4.1
6.8
+ 1 3 .4 %
+ 1 7 .7
+ 1 1 .6
+ 22.0
+ 3 7 .5
+ 5.3
— 4 .5 %
+ 1 1 .3 %
- 0—
226,351 r
r
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 Nine Days
Sept.,'51
A u g ./5 1
Sept./SO
O c t .,*51 O c t.,*50 9 mos. *51 9 mos. *50
112,312 117,952
118,541
35,322
35,407
1,048,183
1,002,286
Source: Terminal Railroad Association of St. Louis.
C R U D E O IL
P R O D U C T IO N — D A IL Y
(In thousands
of bbls.)
Sept., 1951 A u g ., 1951
AVERAGE
Sept., 1951
Sept., 1950
Aug.**51
Sept.,’ 50
31.2
31.7
76.7
165.4
32.0
30.6
81.7
177.3
31.1
27.9
—0—%
+ 1
— 3
+ 4
— 6%
— 6
- 0+ 14
T o ta l...... ....... 306.5
304.7
318.0
+
— '4 %
Arkansas... ____
Illinois........
Indiana...... ........
Kentucky... ........
76.6
Page 164
1%
In the seven district states, the volume of insured
unemployment in mid-September was down 9 per
cent from the amount in August but up 3 per cent
from the volume a year ago. In all of the district
states except Missouri insured unemployment was
down from mid-August to mid-September. The rise
in Missouri was attributed primarily to the shoe and
garment industries.
IN D U S T R Y
Eighth District industry in September showed
some improvement in rate of output from the previ
ous month and continued to hold above the year-ago
level. Relative to a month earlier diverse trends
were in evidence as defense production increased
and some civilian goods production decreased. Manu
facturing output in general was up from August,
partly reflecting seasonal factors. Some lines, how
ever, notably steej and lumber, showed declines.
Mining activity also increased with coal production
rising seasonally while crude oil output remained
unchanged. Construction activity declined at about
the normal seasonal rate.
Manufacturing— Industrial electric power con
sumed in the district’s major cities in September
was up 16 per cent from August on a daily average
basis and was 17 per cent above that of September,
1950. Principal contributors to the large gain over
the month of a year ago were the nonelectrical ma
chinery, paper and allied products, and rubber in
dustries.
Steel mills operated at 81 per cent of capacity in
September-—down 5 per cent from August. But op
erations were 5 per cent above September a year
ago.
Lumber production continued the decreasing
trend it has shown in recent months. Southern pine
mill operations were reduced to a weekly average
of 183,000 feet in September from 193,000 feet in
August and 215,000 feet in September, 1950. De
mand for yellow pine boards was strong. Shdrt and
narrow pine boards, however, were in ovet-supply.
Southern hardwood operators again reduced pro
duction slightly in September, as they had the pre
vious month. In comparison with September, 1950,
output Was down 12 per cent. Low grade hardwoods
were still being produced in excess o f market de
mand.
Production of shoes continued at levels below
those of 1950. For September, it is estimated that
national production declined 3 per cent from the
same month last year. For the nine months ended
September 30, total production of footwear also is
estimated to have declined 3 per cent1. Excluding
military shoes, however, the decline probably was
at least 7 per cent. Recently, manufacturers have
announced, wholesale price reductions on many
lines, following a period of lower hide costs and re
duced sales.
Transportation— Railroad freight interchanges at
St. Louis in September were down 5 per cent com
pared with August and were also slightly less than
in September, 1950. The downward trend continued
during the first nine days of October.
Livestock slaughter in the St. Louis metropolitan
area failed to make the substantial increase in Sep
tember characteristic of that month over the past
four years. Instead, it remained at practically the
same volume as last month, and was S per cent
under a year ago. Farmers were apparently hold
ing cattle off the market to build up their herds and
to take advantage of the good condition of fall pas
tures for further feeding and fattening operations.
Cattle slaughter was down 1 per cent from August
and 21 per cent under that of September, 1950. Hog
slaughter, however, increased 8 per cent over the
prior month and was up 11 per cent in comparison
with last year.
Construction— Construction activity d e c l i n e d
slightly during September as a result of Federal re
strictions on certain types of building activity and
material shortages. Nationally, the total value of
construction put in place during September was $2.8
billion, down 1 per cent from both the preceding
month and September, 1950. On a seasonally ad
justed basis construction activity changed very little
during September.
Private construction continued to decline in Sep
tember as it has for the past six months, largely as
a result of the reduction in home building activity.
Private residential construction activity is now
about two thirds of the 1950 record levels. Commer
cial building also continued to drop off in Septem
ber, reflecting, as it has over the past few months,
restrictions on this type of construction. On the
other hand, factory building, military construction,
and public housing construction activity continued
to expand.
Expenditures on new plant and equipment for
this year apparently will approximate $24.8 billion
as compared with $18.6 billion last year. Capital out
lays this year are expected to be about 35 per cent
higher than in 1950 in dollar values and about 25
per cent more in physical volume. Some slackening
in investment in the fourth quarter, however, may
result from declining expenditures of nondefense in
dustries, offset only partially by investment in those
expanding industries connected with the mobiliza
tion program.
While construction activity on projects under
way changed but little during September, new pro
jects started, indicated by construction contracts
awarded, dropped off considerably. F. W . Dodge
Corporation reports for September indicate that
contracts awarded in 37 Eastern states were down
16 per cent from the same month a year ago, and
Only 26 of the 62 Kentucky whiskey distilleries
in the district were in operation at the end of Sep
tember. This number compared with 17 at the
end of the previous month, but with 50 for Sep
tember, 1950. Most distilleries are limiting produc
tion of new whiskey because of accumulated stocks.
Bottling lines, however, are operating at full sched
ule, in many cases, to meet dealer orders in antici
pation of fall and winter consumer demand.
Mining— Crude oil production in the Eighth Dis
trict again showed little change in September, but
was 4 per cent under production in September, 1950.
Percentagewise, Kentucky fields showed the most
marked production change, with a 4 per cent in
crease over August, and a 14 per cent gain over a
year ago.
In September, district coal production increased
on a daily average basis. It was 5 per cent above
that of August and some 7 per cent above that of
September, 1950. Despite the daily average increase,
a shorter work month resulted in considerably re
duced total production for the month in the district
and nation.
PROD UCTION IN DEXES
CONSTRUCTION
C O A L P R O D U C T IO N IN D E X
B U IL D IN G P E R M IT S
M onth of September
N ew Construction
Repairs^ <tc.
N umber
Cost
Cost
(Cost in
Num ber
1951
1950
1951 1950
1950
1950
1951
thousands) 1951
158
114
96 $ 305 $ 135
83 $
322 $
112
773
224
79
596
1,380
211
Little Rock...
61
124
88
70.
1,557
1,585
51
227
183
4,643
192 197
221
M emphis..,....2, 542 2,436
5,483
766
262 280
3,126
4,991
1,002
347
St. Louis..... . 373
867 867 $1,490 $2,182
Sept. Totals. 3,228 3,172 $12,949 $10,892
$1,212 $1,258
868 931
A u g. Totals„2,9.23 3,470 $ 7,812 $11,537
1 9 3 5 -3 9 = 1 0 0
Sept.,'51
Unadjusted
A u g ./S l
Sept.,’ 50
S e p t./5 1
161.2*
144.1*
151.2
153.5*
Adjusted
A u g .,'51
145.6*
S H O E P R O D U C T IO N IN D E X
1 9 3 5 -3 9 = 1 0 0
Unadjusted
Adjusted
A u g .,'50
A u g ./S !
A a g .,’ 5 i
J u iy /5 1
July ,*51
122
107 R
157
125
111 R
*— Preliminary.
R — Revised,
S ept.,'50
144.0
A u g . ,*50
162
Page 165
TR AD E
D E P A R T M E N T STORES
Stocks
Stock
___________ N et Sales_____________
on Hand
Turnover
Sept., 1951
9 mos. ’ 51 Sept.30,’ 51
Jan. 1, to
compared with
to same
comp! with
Sept. 30,
A u g .,’ 51 Sept.,’ 50 period’ 50 Sept. 30,’ 50 1951
1950
8th F . R . District..-. + 7 %
— 5%
+ 1 %
+ 9%
2.36
2.95
F t. Smith, A r k .1..... + 1 8
+ 6
+ 6
+25
2.41
2.89
Little R ock, A r k ..., + 1 1
— 5
— 3
— 3
2.33
2.83
Quincy, 111..... ........... + 1 1
— 8
+ 3
+18
2.26
2.52
Evansville, In d ....... — 4
+ 5
+ 6
+28
2.17
2.78
Louisville, K y ......... . + 1 2
— 4
- 0— 1
2.74
3.21
St. Louis A r e a 1 2... + 6
— 8
- 0+17
2.24
2.98
Springfield, M o ....... + 7
+ 9
+ 1
+ 6
2.12
2.61
— 1
+ 1
— 2
2.71
2.99
Memphis, Ten n ...... + 8
A ll Other Cities*.... + 5
+ 9
+ 6
+ 9
2.03
2.38
*
Fayetteville, Arkansas; H arrisburg, M t. Vernon, Illinois; Vincennes,
In d ian a; Danville, Hopkinsville, M ayfield, Paducah, K entucky; Chillicothe, M issou ri; Greenville, M ississippi; and Jackson, Tennessee.
2In order to permit publication of figures for this city (or area), a
special sample has been constructed which is not confined exclusively to
department stores. Figures for any such nondepartment stores, however,
are not used in computing the district percentage changes or in comput
ing department store indexes.
2Includes St. Louis, Clayton, Maplewood, M issouri; Alton and Belle
ville, Illinois.
Outstanding orders of reporting stores at the end of Sept., 1951, were
43 per cent smaller than on the corresponding date a year ago.
Percentage of accounts and notes receivable outstanding Sept. 1, 1951,
collected during Sept., by cities:
Instalm ent Excl. Instal.
Instalment Excl. Instal.
Accounts
Accounts
Accounts
Accounts
Fort Sm ith....
Little R ock....
Louisville....*...
M em phis.........
IN D E X E S
....%
18
21
20
46%
46
46
40
Q uincy...... ......
St. Louis.........
Other Cities....
8 th F .R . D ist.
28%
20
16
20
65%
48
51
46
OF
D E P A R T M E N T ST O R E SA LE S A N D STOCK S
8th Federal Reserve District
Sept.,
A u g .,
July, Sept.,
1951
1951
1951
1950
Sales (daily average), unadjusted3..................... 349
301
269
363
Sales (daily average), seasonally adjusted3.... 346
350
344
360
Stocks, unadjusted4 ....................................................
385
392
372
361
Stocks, seasonally adjusted4...................................
347
359
357
325
8D aily average 1 9 3 5 -3 9 = 1 0 0 .
4End of M onth Average 1 9 3 5 -3 9 = 1 0 0 .
S P E C IA L T Y
STO R ES
Stocks
on. Hand
N et Sales
Sept., 1951
compared with
A u g ., ’51 Sept.,’ 50
9 m o s .’ 51 Sept. 30,’ 51
to same
comp, with
period ’ 50 Sept. 3 0 /5 0
Stock
Turnover
Jan. 1, to
Sept. 30,
1951 1950
M en ’ s Furnishings....+ 3 5 %
— 8%
+ 1%
+15%
1.35
1.77
B oots and Shoes........ + 26
+ 4
+ 8
+16
3.00 3.24
Percentage of accounts and notes receivable outstanding Sept. 1,
1951, collected during Septem ber:
M en’ s Furnishings ................... 4 3 %
Boots and Shoes....................... 3 9 %
Trading da ys: Sept., 1951— 2 4 ; August, 1951— 2 7 ; Sept., 1950— 25.
R E T A IL F U R N IT U R E
STOR ES
N et Sales
_______Inventories_______
Ratio
September, 1951
September 30, 1951
of
compared with
compared with
Collections
A u g .,’ 51 Sept.,’ 50 A u g . 31 ,’ 51 Sept. 3 0 /5 0 Sept.,’ 51 Sept.,*50
22%
21%
— 6%
— 4%
8th D ist. Total1....—
- 10% — 23%
— 6
28
— 4
30
— 27
9
4
27
— 6
30
— 27
.— 10
15
14
— 9
— 5
— 18
— 10
__ 9
14
13
— 6
— 17
Louisville..
.— 10
14
15
— 20
M em phis.........
.
13
— 18
- 018
21
— 13
— 32
Little R ock...
+ 7
.— 8
__ 4
17
+ 14
14
— 4
Springfield—
.+ 3
-X*
*
*
— 21
.— 13
Fort Smith....
*N o t shown separately due to insufficient coverage, but included in
Eighth D istrict totals.
1In addition to following cities, includes stores in Blyth^ville, Pine
Bluff, A rkansas; Hopkinsville, Owensboro, K entucky; Greenwood, M is
sissippi; Hannibal, M issouri; and Evansville, Indiana.
2Includes St. Louis, M issouri; and A lton , Illinois.
—
8Includes Louisville, K en tu ck y; and N ew Albany, Indiana.
PERCENTAGE
D IS T R IB U T IO N
Cash Sales ........... ........................................
Credit S a le s ..................................................
Total Sales ......... ...............................
Page 166
OF
F U R N IT U R E
SALES
Sept.,’ 51
A u g .,’ 51
Sept.,’ 50
1 4%
86
1 00%
1 4%
86
100%
13%
87
100%
down 14 per cent from August, 1951. However,
partly as a result of the easier credit terms inaug
urated September 1, and partly due to builders' ef
forts to get construction under way before* stiffer
material controls are imposed, the number o£ new
homes started in September increased from 85
thousand units in August to 91 thousand units in
September.
In the Eighth District construction contracts
awarded in the third quarter decreased 11 per cent
from the like period of 1950. Residential construc
tion contracts showed a decline of 11 per cent, while
nonresidential construction contracts awarded were
off 10 per cent.
TRADE
Retail sales during September did not measure up
to retailers’ anticipations. They had hoped, after
suffering sales declines during July and August
from a year ago volume, that seasonal buying dur
ing the month would place them in a better com
parative position. But the weather did little to en
courage purchase of seasonal items. And last year
sales were heavy during the first-half of the month
as buyers tried to get their purchases in ahead of
instalment credit controls. The result was that
sales for this September were down compared to
those of September, 1950.
Except at men’s wear stores, the retail value of
inventories held by reporting retail lines on Septem
ber 30 was not much changed from either a month
earlier or a year ago. The volume of buy-orders
outstanding on the retailers books was sharply be
low that of a year ago, however.
Department Stores— Sales volume duririg Sep
tember for the district as a whole increased 7 per
cent from that in August but was 5 per cent smaller
than in September, 1950*. One less trading’ day dur
ing September 1951 than a year ago placed the sea
sonally adjusted index of daily sales at 346 per cent
of the 1935-39 average. In comparison the index
was 350 per cent in August and 360 per cent in the
comparable month last year. Cumulative district
sales for the first nine months of 1951 as compared
to 1950 showed volume slightly larger this year than
last.
*
Interpretation of department store sales figures has been complicated
somewhat in recent months by a fairly widespread movement to establish
suburban branches of downtown stores. This movement is national in
scope. In this district it affects primarily St. Louis area sales.
A newly-opened branch department store obtains sales from three
sources: 1) existing department stores, 2 ) non-department stores in the
area of the newly opened branch, and 3) to some extent, by increasing
the percentage of consumer income spent. T o include all such sales
volume at newly opened branches, tends to exaggerate the amount of
total retail buying insofar as department store sales are taken as a first
approximation of such buying. T o adjust for the factor of sales gain at
the expense of non-department stores, not all of the total sales at newlyopened branch stores are included at present. This percentage of “ relo
cated sales volume” is derived by estimate. W h en the new branch has
been in operation for a year, total sales figures will be included in area
aggregates.
Except in the St. Louis metropolitan area and in
Little Rock, cumulative 1951 sales gains ranged
from slightly larger than last year in Louisville and
Memphis to an average gain of 12 per cent in sev
eral small district cities.
The retail value of inventories held by reporting
district department stores on September 30 was not
much changed from a month previous but was 9
per cent above that of last year. The value of out
standing orders at the end of September was
slightly below that on August 31 and was sharply
below that on September 30, 1950.
Specialty Stores— St. Louis womens’ apparel
stores reported sales during September were 16 per
cent larger than in August but were 18 per cent
below those in September 1950. Inventories at the
end of September were valued 6 per cent less than
a month previous and were slightly below those a
year ago.
Men’s wear stores sales in the district were sub
stantially larger in September than in August but
were 8 per cent below those last year. Inventories at
the end of September were 7 per cent larger than on
August 31 and 15 per cent larger than on September
30, 1950.
Furniture Stores— September sales volume of re
porting furniture stores throughout the district av
eraged 10 per cent below August and 23 per cent
under September 1950. The decline from last year
was partly the result of heavy buying prior to re
imposition of installment credit controls at midSeptember 1950. The retail value of inventories held
by district stores on September 30 was 4 per cent
less than a month earlier and 6 per cent less than a
year ago.
AGRICULTU RE
The October 1 forecast for total outturn of Crops
for the nation was slightly lower than a month
earlier. The estimate of the cotton crop on October
1 was 16,931,000 bales, a decline of 360,000 bales
from September 1. The decrease was concentrated
in the central part of the cotton belt and included
a 200,000-bale decline in Mississippi, 40,000 bales
in Arkansas, and 10,000 in Tennessee. An increase
of 10,000 bales was reported for Missouri.
Rains during September increased the prospects
for burley tobacco by about 2 per cent; the October
1 estimate being 566 million pounds. Increases
also were reported for fire-cured and dark aircured tobacco.
Estimated corn production was 26 million bushels
less than on September 1. Declines occurred largely
in the northern corn belt where frosts in late Sep
tember caused considerable damage. Corn in the
Eighth District, for the most part, was not dam
aged. The national crop of 3.1 billion bushels fore
cast is 126 million bushels less than in 1950, but
124 million bushels larger than the 10-year average.
The October estimate of production for other
feed and food grains, with the exception of rice and
grain sorghums, was lower than that of September.
Hay production in 1951 was at record levels for the
nation, and pastures generally in the district states
were in good condition for the fall grazing season.
Generally favorable weather throughout the
Eighth district for the past month sped the harvest
ing of 1951 crops. Cotton harvesting, for example,
was well advanced as a result of the best cotton
picking weather in recent years. The 1952 wheat
crop, however, was reported at mid-October to need
surface moisture in some areas.
Prices received for agricultural products were
lower in mid-September than in August. The de
cline marked the seventh consecutive month of the
downward movement in tlie index of prices received.
However, prices of several important agricultural
commodities strengthened during the latter part
of September and early October, including prices for
cotton and hogs. As prices received were lower
and prices paid were unchanged for September, the
parity ratio (ratio of prices received to prices paid)
narrowed 1 point to 103 on September 15.
BANKING
Banks in both the district and the nation ex
panded their loans during September. In both cases
the expansion was roughly the expected seasonal
amount and was centered in loans to business.
Most of the new loans in the Eighth District went
to finance the marketing and processing of farm
AGRICULTU RE
CASH FAR M
(In thousands
A u gust,
of dollars)
1951
Arkansas............ $ 26,621
Illinois................ 156,634
Indiana............... 102,348
Kentucky...........
36,287
Mississippi........
29,712
Missouri............. 104,669
Tennessee..........
34,066
Totals............. $490,337
R E C E IP T S A N D
IN C O M E
A u gust, 1951
8 month total Jan. to A u g .
compared with
1951
July,
A u g .,
compared with
1951
1950
1951
1950
1949
— 4% + 49%
$ 2 1 9 ,3 0 1
+31%
+ 4%
— 22
+ 14
1,249,551
+14
+15
+ 4
+ 21
694,576
+18
+17
— 9
+ 20
326,303
+ 7
+ 5
+54
+116
190,641
+63
— 12
— 9
+ 20
711,217
+22
+21
+ 9
+ 26
254,092
+19
+14
— 8 % + 23%
$3,645,681
+19%
+13%
S H IP M E N T S
AT
N A T IO N A L
STOCK
YARDS
____________Receipts____________ __________ Shipments___________
September, *51
September,’ 51
compared with
compared with
Sept., 1951 A u g .,*51 Sept.,’ 50 Sept., 1951 A u g .,*51 Sept.,’ 50
Cattle and calves....l43,766
+ 3%
+ 9%
81,448
+ 7%
+59%
H ogs...........................235,613 — 11
+13
67,349
— 28
+19
Sheep.......................... 49,174 — 33
— 20
29,070
— 40
+20
Totals....................428,553 — 1 0 %
+ 7%
177,867
— 19%
+35%
Page 167
products. For the country as a whole about half the
loan expansion went for this purpose, but in
addition metal manufacturers, mining concerns, and
public utilities substantially increased their borrow
ings reflecting the growth in loans for defense and
defense-supporting purposes.
The bulk of the $60 million loan expansion at
weekly reporting banks from June 27 to October 10
went to finance the marketing and processing of
farm produce. Over half the increase in loans went
to commodity dealers, mostly on cotton at Memphis.
The second largest increase went to food manu
facturers. By contrast, sales finance companies,
wholesalers, retailers, and “other” businesses re
duced their outstanding loans in the period. De
fense loans, going largely to metal and metal prod
ucts manufacturers, showed only a slight gain
($3.5 million) in the period, reflecting the relative
lack of defense work in this area. Similarly loans
to finance defense-supporting activities rose only $5
million.
District Banking Developments— Earning assets
rose $61 million at all district member banks during
September. Most of the increase ($57 million) was
in loans, roughly the normal seasonal expansion at
this time. As usual in September the loan expansion
was primarily at the larger city banks, and reflected
in large measure the movement of cotton and other
crops off the farm. “ Other” (largely consumer)
loans also were up somewhat in the month.
Deposits rose $142 million in the month. A large
net inflow of funds permitted banks, both large
and small, to build up their cash balances and re
duce borrowings.
DEBITS TO D EPO SIT ACCOUNTS
Sept.,
A u g .,
(I n thousands
1951
S$ 0
of dollars)
1951
26,950 $
27,993 $
24,645
E l D orado, A r k .............. .$
44,877
Fort Smith, A rk .......... ..
43,418
45,809
9,119
7,518
H elena, A r k .„ ..............
6,517
135,219
135,708
144,415
L ittle Rock, A r k ...........
34,028
29.653
29,869
Pine Bluff, A r k ...............
Texarkana, A r k .* ..........
14,271
11,790
15,465
27,839
A lton , 111............................
29,355
26,035
E .S t .L .-N a t .S .Y ., 111...
125,791
132,722
145,908
31,449
32,116
Q uincy, 111..... •«............... .
33,207
150,096
125,318
133.782
Evansville, In d...............
602,547
678,887
568,454
Louisville, K y ..................
41,139
42,659
Owensboro, K y .....— ....
43,824
Paducah, K y ..........
26,724
26,296
15,756
23,298
22,679
Greenville, M iss............
19,723
12,746
12,494
12,856
Cape Girardeau, M o....,
10,030
9,534
9,195
H annibal, M o ..................
52,816
49,425
Jefferson City, M o ........
61,659
1,659,331
1,775,148
St. Louis, M o ...~ .......... . 1,702,651
11,018
10,635
11,946
Sedalia, M o ......................
74,583
Springfield, M o ...............
73,406
69,362
21,353
19,667
19,345
Jackson, Tenn................
571,366
491,795
764,709
M em phis, Tenn........... .
$3,736,609 $3,824,275 $3,839rQ54,
Business Loan Expansion Since June— From June
27 to October 10 (approximate seasonal low point
to latest date reported) business loans rose less than
$60 million at the weekly reporting member banks.
By comparison, these loans rose almost $150 mil
lion in the same period last year and averaged about
a $75 million gain in the comparable periods of
1946-49. The smaller expansion this year reflects
the Voluntary Credit Restraint Program and the
tight money market over most of the period.
At Evansville and Little Rock commercial and
industrial loans declined from the end of June to
mid-October. At St. Louis, Memphis, and Louis
ville the rate of expansion was less than usual at
this time.
M EM BER
( I n Millions of Dollars)
A ssets
a. Loans ..................................
b. U .S . Government Obligations......—
c. Other Securities ................................ ......
7L Reserves and Other Cash Balances— ...
a. Reserves with the F .R . bank...........
b. Other Cash Balances8..........................
3. Other A ssets ............................................
5.
6.
7.
8.
.....
Liabilities and Capital
Gross Demand D eposits........................... ___
a. Deposits of Banks....................
b. O ther Demand D eposits...................
Tim e Deposits ....................« .......................
Borrowings and Other Liabilities..........
Total Capital Accounts................................
Sept. , 1951
compared with
A u g .,*51 Sept.,’ 50
— 4%
+ 9%
— 2
+ 3
4*40
+21
— 6
- 0+ 15
+ 14
+ 8
+ 31
— 5
+ 7
— 9
+ 6
— 3
+ 2
— 17
— 6
— 11
+ 6
+ 7
+ 3
+ 70
+ 2
+ 18
+ 3
+ 2
— 1
+ 5
+ 9
— 14
+ 7
+ 3
— 4
— 8
+ 4
+ 2
+ 8
+ 9
+ 10
+ 16
— 25
— 3%
— 2%
T otal debits for
*These figures are for Texarkana, Arkansas, only.
banks in Texarkana, Texas-Arkansas, including banks in the Eleventh
D istrict, amounted to $36,117.
E IG H T H D IS T R IC T
B A N K ASSE TS A N D L IA B IL IT IE S
B Y SELECTED G ROUPS
Smaller. Banks3
Large City Banks1
A ll Member4
Change fro m :
Change fro m :
Change fro m :
A u g . 1951
Sept. 1950
A u g . 1951
Sept. 1950
Sept. 1950
A u g. 1951
to
to
to
to
to
to
Sept. 1951
Sept. 1951
Sept. 1951
Sept. 1951 S e p t 1951
Sept. 1951 Sept. 1951
Sept. 1951L Sept. 1951
$1,713
$ + 23
$ + 72
$2,362
$ + 38
$ + 94
$+166
$ + 61
631
+
7
+ 54
1,222
+ 50
+ 101
1,853
+ 155
+ 57
887
+ 11
966
— 19
+
7
+ 16
+
9
1,853
—
8
195
+
5
+
9
174
+
7
—
14
369
+ 12
—
5
+ 129
519
+ 20
+ 76
876
+ 76
+ 205
+ 96
1,395
241
443
+
6
+ 39
+ 112
+
1
+ 73
684
+
7
278
+ 14
+ 56
711
+ 89
+ 93
433
+ 75
+ 37
—
2
19
—
13
29
+
3
48
— 15
+
5
+
2
$5,518
$ + 142
$ + 376
$3,267
$+112
$+225
$2,251
$+
30
$+151
$4,120
657
$ + 14t
+ 34
+ 107
+
1
—
3
+
3
$+332
+ 102
+230
+ 16
—
4
+ 32
$2,534
618
1,916
481
43
209
$+111
+ 30
+ 81
+
1
—
1
+
1
$+213
+ 95
+ 118
+
1
—
6
+ 17
$1,586
39
1,547
501
8
156
$+
+
+
30
4
26
$+119
+
7
+ 112
+ 15
+
2
+ 15
982
51
365
-O —
+
2
2
$3t267
$ + 142
$+112
$+225
$2,251
$ + 30
$ + 151
$ + 376
9. Total Liabilities and Capital Accounts—
$5,518
in c lu d e s 13 St. Louis, 6 Louisville, 3 Memphis, 3 Evansville, 4 Little Rock and 4 E ast St. Louis-N ational Stock Y ards, Illinois, banks. r
in c lu d e s all other Eighth District member banks. Some of these banks are located in smaller urban centers, but the majority are rural area banks.
Item s “ other assets” and “ Total Capital Accounts for smaller banks revised for A u g . 1951.
■Includes vault cash, balances with other banks in the United States, and cash items reported in process of collection.
*A11 member banks as of end of month. Change from month ago and year ago, however, are for identical group of banks.
Page 168
@FedFRASER