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Monthly Review
A

Volume X X X I V

N

K

NOVEMBER, 1952

Number 11

Bank Reserves
and the l^fotc? of Funds
District member bank reserves can be

studied by reclassifying changes in the balance
sheet items of the Reserve Bank. Major factors at
work on district bank reserves ( as on the combined
reserves of all member banks) are currency in cir­
culation, Treasury operations, Federal Reserve
“float” and borrowing. System open market op
erations and movement of gold, major factors
nationally, are not listed separately in district
analysis as their influence is brought to bear, districtwise, through the interdistrict flow of funds.

-

The influence of these factors on district mem­
ber bank reserves in the first three quarters of
1952 shows that banks were under pressure for
reserves primarily as a result of an outflow of funds
from the district. The drain was occasioned by
net outflows from banks in the Memphis and
Little Rock areas, partially offset by net inflows
to banks in the Louisville and St. Louis regions.




Largest net outflow went to the financial centers
of Chicago and New York while, on balance, funds
flowed into the Eighth District from other areas.

D istrict m e m b e r bank r e s e r v e s . . .
HE L E V E L of reserves is important to each
bank manager as the availability and cost of
reserves determines in large part the volume o f his
bank’s earning assets.1 The level of reserves is also
of prime importance in adjusting the nation’s
money and credit supply to an amount appropriate
to the volume of production and employment and
the trend of prices.

T

The myriad of forces playing on the level of
reserves can be grouped and studied. For many
years the Federal Reserve System has published
figures on the sources and uses of reserve funds
for all member banks. In these data the forces are
usually grouped into a few significant categories:
routine money market factors, including gold inflow
or outflow, currency movements, and Treasury op­
erations; plus System operations in both securities
and loans, and so on. The System developed the
statistics primarily to help determine Federal
Reserve policy and to gauge its effectiveness.
Likewise the forces affecting reserves of member
banks in the Eighth District can be grouped and
measured. Separate determination of the district
reserve situation is warranted and helpful. Despite
the high degree of liquidity of funds in the United
States, reserve positions of banks in one area may
differ sharply from the average or over-all position
of all banks. In the first place, credit forces orig­
inating in the money market center (System open
market operations, for example) require a certain
amount of time to work down through the financial
system to each individual bank throughout the
nation. Secondly, a group of banks can lose funds
to, or can gain funds from, other banks. On a
national scale the flow of funds from one district
to another produces gains and losses which tend to
cancel out and leave total member bank reserves
unaffected.
Districtwise the flow of funds is of primary impor­
tance in the reserve picture of member banks. This
flow of funds is great in size and complexity. It is
the payments side of the sales of goods, services,
and property rights making up the bulk of our
economic activity. Not all of the payments, of
course, cross Reserve district lines. Nevertheless, a
large volume of payments does move between dis­
tricts and becomes one of the major factors affecting
district member bank reserves. Thus, a study of
the district reserve factors, in addition to providing
an insight into district banking, should throw light
1 Reserves, as used here, are deposits of member banks in the Reserve
Banks, including those that are required by law to be carried there
and additional deposits called “ excess reserves.”

Page 156




on nonbanking economic relationships of this dis­
trict with other areas.
In this article, the method of obtaining the factors
is discussed briefly, the major factors are analyzed,
and an analysis of the effect of the major factors on
district member bank reserves for the first three
quarters of 1952 is presented.
. . . ca n b e s tu d ie d b y r e c la s s ify in g c h a n g e s in
th e b a la n ce s h e e t ite m s o f t h e R e s e r v e B ank .
As provided in the Federal Reserve Act, each
member bank maintains its legal reserves with the
Federal Reserve Bank of its district. Therefore,
these reserves of Eighth District member banks
are shown on the balance sheet of the Federal
Reserve Bank of St. Louis as a liability item. Basi­
cally, the statement of factors affecting reserves
over a period is a reclassification of the changes in
the other balance sheet items of the Federal Reserve
Bank of St. Louis as either factors of gain or loss
to member bank reserve balances.2
However, some transactions by individual Re­
serve Banks may be reflected in other balance sheet
items without directly and immediately changing
member bank reserves. Examples of such trans­
actions are: changes in an individual Reserve
Bank’s participation in the System open market
account and foreign deposit accounts, return of
Federal Reserve notes by one Reserve Bank to
the issuing Reserve Bank, transactions directly
between a Reserve Bank and the United States
Treasury, and changes in Federal Reserve Bank
gold certificate holdings.
As as result, to obtain the factors affecting mem­
ber bank reserves some transactions must be recon­
structed and eliminated. This is done largely by
analyzing the interdistrict flow of funds, excluding
those transactions that do not have a direct effect
on member bank reserves, and preserving those
that do have an effect.
3
For example, if a member bank desires currency, its reserve account
on the books of the Federal Reserve Bank is decreased and the account
“ Federal Reserve N otes O utstanding ( N e t ) ” is increased.
Since this
transaction, or its reverse, is the typical transaction with regard to
the item “ Federal Reserve N otes O utstanding ( N e t ) ,” it is reasonable
(subject to later qualifications) to assume that a net increase in
currency outstanding is a factor tending to lower member bank reserve
accounts.
O n the other hand, when a member bank borrows funds from the
Reserve B ank, the member’ s reserve account is credited (increased).
Therefore, the net increase in total “ Discounts and Advances” on the
books of the Federal Reserve over the period can generally be considered
a factor adding to reserves of district member banks.
From the above examples, it can be seen that in the reclassification
of changes in Federal Reserve B ank balance sheet items as either
gains or losses to member bank reserves the following general rules
may be developed:
1) an increase in an asset item is treated as a
factor increasing member bank reserves; 2 ) a decrease in an asset
item lowers member bank reserves; 3 ) an increase in another liability
account lowers member bank reserves; and conversely 4 ) a drop in
another liability account adds to member bank reserves.
A n d since we
start with a balance sheet, the sum of all other balance sheet item
changes added algebraically must equal the change in member bank
reserves.

M ajor fa c t o r s at w ork o n d is tr ict bank r e s e r v e s
( a s o n th e c o m b in e d r e s e r v e s o f a ll m e m b e r
b a n k s) a r e c u r r e n c y in c ir c u la tio n , . . .
After analyzing the balance sheet and making the
aforementioned adjustments, the following stand
out as the major factors directly affecting district
member bank reserves: interdistrict flows of funds,
currency in circulation, Treasury operations, Fed­
eral Reserve “ float,” and borrowings from the
Federal Reserve Bank. In addition, several minor
factors affecting district member bank reserve bal­
ances may be noted. Examples of these are a shift
of funds between member and nonmember banks
and certain expenditure transactions of the Federal
Reserve Banks. The following paragraphs will
discuss briefly the major factors affecting reserves
starting with currency in circulation.
A flow of currency into circulation drains banks
of reserves; a return flow into banks adds to bank
reserves.3 Currency in circulation includes money
in vaults of banks (other than the Reserve Bank)
as well as in the hands of the general public. Since




vault cash does not earn a return and does not
count as reserves for member banks, banks usually
keep only enough cash in their vaults to insure
that an adequate supply is on hand to meet the
needs of their customers. Thus, changes in the
amount of money in circulation are ultimately deter­
mined by the demands of the public.
Day-to-day demand for currency is irregular; at
the same time the demand takes wide seasonal
swings. For a week or more before each of the
principal holidays, the amount of money in circu­
lation increases substantially. In addition there
are yearly, monthly and weekly patterns in the
amount of money outstanding. The chart plotting
outstanding notes of the Federal Reserve Bank of
St. Louis shows the several patterns.
8 Determination of the impact of the currency movement factor on
district member bank reserves from Federal Reserve Bank balance sheet
changes gives an opportunity to show how balance sheet changes must
be reconstructed before they will properly measure their effect on
district member bank reserves.
Changes in currency in circulation
which affect district member bank reserves are the net result of
changes in three item s:
1.
Federal Reserve notes of St. Iyouis outstanding.
This figure is
obtained from changes in the balance sheet liability item “ Federal
Reserve N otes ( N e t ) ” with adjustment made for the amount of these
(Continued on next page)

Page 157

Also, there is a long-run growth trend in the
demand for currency upon which the patterns are
superimposed. During 1951, money in circulation
in the district rose an estimated $75 million. It
should be noted, however, that the long-run expan­
sion in demand for currency is neither uniform nor
continuous.
. . . T rea su ry o p e r a tio n s 9 . . .
Treasury operations are the second major factor
affecting district member bank reserves. W ith the
growth of the Federal budget and debt, transactions
of the United States Treasury, both in district and
nation, have become one of the dominant factors
affecting member bank reserves. Treasury receipts
(those which come to the Reserve Bank or the
Treasury) drain banks of reserves. Conversely,
Treasury expenditures add to bank reserves.4
Timing of some Governmental receipts (such as
income taxes or sales of securities) periodically
causes temporary drains on bank reserves. Some
Federal expenditures, on the other hand, such as
interest payments on the debt, add considerable
sums to bank reserves at certain times.
The bulk of Treasury spending in a district is
reflected in changes in the Treasury’s general
account on the Reserve Bank’s books in that dis­
trict. This is true because all Treasury checks,
regardless of how or where drawn, that are pre­
sented to a Federal Reserve Bank reduce the
Treasury’s account in that bank.
. . . F ed era l R e s e r v e “ f l o a t ” . . .
Federal Reserve “ float,” another major influence
on district member bank reserves, arises through
transit items that are credited to the reserve ac­
counts of depositing banks prior to the actual collec­
tion by the Federal Reserve Bank.5 Total float out­
standing arises because the collection of some items
takes longer than the time allowed in the official
deferred availability schedule. Recently float has
been averaging about $35 million in the district.
(Footnote 3— continued)
notes returned to the St. Louis Federal Reserve Bank or sent to the
Treasury for destruction by other Federal Reserve Banks. For example,
if the account “ Federal Reserve N otes’ * outstanding rose $4 million
in a week and other Reserve Banks returned $3 million of these notes
(either to the Federal Reserve Bank of St. Louis or the Treasury) in
the same week, it would mean district banks drew out $7 million of
these notes in the period.
2. Other Federal Reserve notes. This figure is obtained from changes
in the balance sheet asset item “ Federal Reserve N otes of Other Banks”
with adjustment made for the amount of notes returned by the Federal
Reserve Bank of St. Louis to other Reserve Banks for re-issue or to
the Treasury for destruction.
F or example, if the account shows an
increase of $7 million during a week in which $5 million notes of
other ^ Reserve Banks were returned, it would mean district banks
deposited $12 million of these notes in the Reserve Bank. (A t present
the amounts returned by the branch banks are not included in this
adjustment.)
3. Treasury currency and coin.
This figure is obtained from changes
in the balance sheet asset item “ Other Cash.”
( A t present this item is
not corrected for additions resulting from acquisitions of new currency
or coin from the Treasury or subtractions from the items resulting

Page 158




Changes in Federal Reserve Bank float produce
short-term fluctuations in member bank reserves
of substantial proportions, frequently expanding or
contracting more than $30 million in a single week.
Over longer periods, changes in float are of less
importance as they tend to cancel out. Exceptions
are when deferred availability schedules are revised
or when there are major changes in check-handling
procedures, rapidity of transportation, business
activity or bill-paying patterns.
Since float arises in part from lags in the clearing
of deferred availability items, fluctuations in the
amount of float reflect changes in the number and
average amount of checks written. Transportation
delays due to such factors as weather and strikes,
or other check-clearing delays, increase float
sharply. Although there are numerous random
movements in float, regular intra-weekly and intra­
monthly movements may be observed. Levels of
float tend to be higher towards the end of each
week and towards the middle of each month (see
chart). The sharpest expansion of float generally
takes place at mid-December as check volumes
reach their peak.
. . . a n d b o r r o w in g .
Individual banks have virtually no control over
the foregoing factors— currency movements, Treas­
ury operations, and float. By contrast district
member banks have a large measure of control over
their borrowings from the Reserve Bank, another
major factor in the level of reserves. Banks borrow
to adjust their reserve positions. Borrowings by
member banks add to their reserves; repayments
lower their reserves.
Borrowing was of prime importance during the
’twenties, but during the ’thirties and ’forties it
played a minor role as a factor of adjustment in
bank reserves. During the past year and a half
there has been some revival in borrowing by mem­
ber banks, although the level is still considerably
below that of the ’twenties. Today, it is not unusual
to find borrowings larger than total excess reserves;
at times borrowings are more than double excess
reserves.
from return of unfit currency to the Treasury, both of which cases are
balanced with opposite entries in the Treasury’s account rather than
in member banks’ accounts.)
4
I t might be pointed out that the Treasury operations figure (ad­
justed to exclude purely inter-Reserve Bank transfers made by the
Treasury) shows only the net direct effect on district bank reserves
due to Treasury operations.
I t does not attempt to show the relation
between total Government expenditures on district goods and services
and total tax receipts in the district.
Other factors are included in
the net Treasury operations figure such as sales and redemptions of
Government securities.
8 Federal Reserve float does not appear as such in the statements of
condition of the Federal Reserve Banks.
I t is a computed item used
mainly in analyzing changes in member banks’ reserves. Federal Reserve
float is the difference between “ Uncollected Item s” on the asset side
of the Federal Reserve Bank statement and “ Deferred Availability
Item s” on the liabilities side.

S y stem o p e n m a rk et o p e r a tio n s a n d m o v e m e n t
o f g o ld , m a jo r fa c t o r s n a tio n a lly , a r e n o t listed
s e p a r a te ly in d is tr ict a n a lysis . . .
It should be pointed out that there are two cate­
gories used in the national analysis of factors
affecting member bank reserves that do not appear
in the district factors: System open market opera­
tions and gold movements together with related
changes in foreign deposits at the Federal Reserve
Banks.
There are virtually no movements of monetary
gold into or out of the Eighth District and no direct
deposits of foreign banks with the Federal Reserve
Bank of St. Louis. Further, Federal Reserve Sys­
tem open market operations do not directly affect
Eighth District member bank reserves. These
transactions are not carried on in this district.
However, through their effect on the interdistrict
flow of funds, these operations have an important,
but indirect, effect on district member bank re­




serves. When the System sells securities in the
New York market, funds are absorbed in payment
for the securities. As a result, reserve positions of
money market banks generally become tighter.
With the tighter reserve positions the normal flow
of funds in and out of the New York area tends to
be disrupted. More funds tend to move into New
York on balance and the tightness of reserve posi­
tions of banks in the money market center caused
by System open market operations is transmitted to
and influences the reserve positions of most banks
in the country.

. . . as t h e ir in flu e n c e is b r o u g h t to b e a r , distr ictw is e 9 t h r o u g h th e in te r d is tr ict flo w o f fu n d s .
The most important factor affecting bank
reserves is the flow of funds into and out of the
district. This flow is in very large volume. Over
the year it amounts to many times the total re­
sources of all member banks in the Eighth Federal
Reserve District. T o the extent that incoming and
Page 159

outgoing funds match both in volume and in tim­
ing there is no effect on bank reserves. But such
is seldom the case, although the difference between
the two is small in view of the magnitude of the
flows.
A brief description of the check-clearing mechan­
ism might be helpful in understanding the inter­
district flow of funds. Nearly all payments, in terms
of amount, are made by transfer of demand de­
posits. A clearing mechanism to facilitate the col­
lection of checks (and other transit items) is, there­
fore, indispensible to our banking system.
The Federal Reserve Bank of each district clears
checks for banks within its district which have
deposited funds with the Reserve Bank. In clear­
ing the checks the Reserve Bank increases the re­
serve account of the commercial bank presenting
the check for payment and decreases the reserve
account of the bank against which the check is
drawn or its correspondent.6 Thus check clearance
is completed through the reserves of the commer­
cial banks. A lack of balance between incoming
and outgoing checks, in other words between re­
ceipts and payments, means some reallocation of
reserves. When the transaction is between two
banks in the same district, total reserves of all
banks in the district remain at the same level.
T o meet the problem of clearing checks which
cross district borders, that is between commercial
banks that carry their reserve accounts with dif­
ferent Reserve Banks, the Interdistrict Settlement
Fund was established. The Fund is composed of
a portion of each Reserve Bank's gold certificate
holdings.
For a check drawn on a bank outside the dis­
trict, the commercial bank presenting the check
receives credit in its reserve account; the Reserve
Bank in the other district decreases the reserve
account of the commercial bank against which the
check was drawn or its correspondent. The trans­
action is complete so far as the commercial banks
are concerned but the first Reserve Bank now has
a claim against the second. The settlement of
inter-Reserve Bank claims is accomplished by the
transfer of the ownership of gold certificates in the
• T h is statement is an over*simplification.
Actually clearing balances
of nonmember (par) banks m ay also be reduced by check collection.
I t should also be noted that only about one-third of the member
banks in this district customarily deposit their clearing items with the
Federal Reserve Bank or its branches.
Instead, collection of their
checks is effected through correspondent banks (for the m ost part
members o f the System ) which credit the depositing bank and then
proceed to collect the funds represented by the check either directly
from the drawee bank, through another correspondent bank representing
the drawee bank, or through its Federal Reserve Bank.
Further, only about one-half of the member banks in this district
characteristically use their balances with the Federal Reserve Bank to
pay for checks drawn on them.

Page 160




Interdistrict Settlement Fund from one Reserve
Bank to the other.
Most of the claims of Reserve Banks in the Interdistrict Settlement Fund arise from checks or wires
they present (as the collecting agency for their dis­
trict banks) drawn on commercial banks in other
districts. However, not all transactions in the Fund
are of this nature. Some are purely inter-Reserve
Bank transactions that must be reconstructed and
eliminated in order to get the net effect of inter­
district check and wire transfers on member bank
reserves.
Since there are twelve Federal Reserve districts
and twenty-four branches in the country all par­
ticipating in the Interdistrict Settlement Fund, it
is possible, for purposes of studying interdistrict
money flows and their effect on reserves, to divide
the country into 36 areas and study the flows from
each of them to all the others. The Eighth Dis­
trict has four of these areas, divided between the
Federal Reserve Bank of St. Louis and the branch
banks at Little Rock, Louisville, and Memphis. The
map shows the 36 areas into which the country is
divided.
Interdistrict Settlement Fund transactions do not
include all interdistrict payments. Some interdis­
trict payments are made by cash; some checks (in­
cluding all checks drawn on non-par banks) are
cleared directly or through correspondent banks
without passing through the Fund. However, the
volume of checks and other items cleared through
the Fund is substantial. Normally this district pre­
sents over $2 billion of these items drawn on the
rest of the country every month. At the same time,
the rest of the country normally clears a roughly
similar amount of checks against the district.
Since some interdistrict payments do not pass
through the Interdistrict Settlement Fund, the
foregoing data do not show gross movement of
funds. However, the difference between the in­
flow into and the outflow from the Eighth District
in the Fund measures fairly closely the total net
flow of all funds into and out of the district.
Currency and check movements not recorded in
the Fund probably take place only within narrowly
defined limits set by practice or custom. A sub­
stantial deviation from these limits would probably
result in transactions that would show up in the
Interdistrict Settlement Fund.
Reductions of excessive Federal Reserve note
accumulations by return of notes to the issuing
bank and adjustment by wire or check transfer of
abnormal levels of correspondent bank balances
outside the district are two such transactions.

DISTRICT

AND

FEDERAL

BRANCH
RESERVE

REGIONS

SYSTEM

BOUNDARIES OF FEDERAL RESERVE DISTRICTS
BOUNDARIES OF FEDERAL RESERVE BRANCH TERRITORIES

T o facilitate the bookkeeping work involved in
the Interdistrict Settlement Fund, the Board of
Governors of the Federal Reserve System began,
last February, to put Fund transactions on punch
cards. These cards, totaled by weeks, give the
payments and receipts of every Federal Reserve
Bank and branch to and from every other Reserve
Bank and branch. These data are of considerable
help in analyzing interrelationships (both financial
and nonfinancial) of the various regions.

T h e in flu e n c e o f t h e s e fa c t o r s o n d is tr ict m e m b e r
bank r e s e r v e s in th e fir s t t h r e e q u a r ters o f
1952 sh o w s th a t bank s w e r e u n d e r p r e s s u r e f o r
reserves . . .
The influence of these five major factors on the
reserve positions of Eighth District member banks
can be demonstrated with actual data for the first
three quarters of 1952. Over most of the period
from the end of December, 1951, to the end of
September, 1952, district member bank reserves
were tight. Excess reserves were below “ normal”
for nearly two-thirds of the nine-month period.




A t one point, total reserves of all district member
banks were lower than total required reserves. Re­
flecting the tightness, banks generally maintained
their borrowings at a high level. Frequently bor­
rowings were more than double excess reserves.
Although district bank reserve positions were
generally tight in the period, they did ease sig­
nificantly several times. For instance, banks experi­
enced some improvement in their reserve positions
during January. The gain of funds centered in a
$41 million seasonal return flow of currency into
banks.
Reserve positions of district banks, after being
under pressure during February, eased again in
March. This easiness reflected primarily a sizable
($95 million) gain of funds due to Treasury opera­
tions. Gain of funds from Treasury operations is
unusual during March. However, Treasury han­
dling of payments and receipts made reserves avail­
able rather than absorbing them over the March
15 income tax date. Delays in processing tax re­
turns and the establishment of “ X ” balance ac­
Page 161

counts tended to minimize the initial impact of tax
collections on reserves.7 Meanwhile Treasury ex­
penditures and net redemptions of securities rose.
From the first week of April through the first
week of September district bank reserve positions
were almost continuously tight. In the last three
weeks of September district bank reserves eased.
Easiness in this period reflected a sharp ($90 mil­
lion) net inflow of funds from other districts.

. . . primarily as a result of an outflow
of funds from the district•
Tightness in reserve positions over most of the
first nine months of 1951 reflected a sharp net out­
flow of funds to other areas. For the entire nine
months this net outflow amounted to $83 million,
despite the aforementioned $90 million net inflow
in the final three weeks of the period.
An outflow of funds from the district can be
caused by several types of transactions, for in­
stance: 1) excess of commodity imports over
commodity exports; 2) movement of funds to other
districts by banks or other institutions; 3) net
investment outside the district; 4) net use of
services from other districts such as transporta­
tion, recreation, education, insurance, and capital;
and 5) net gifts.
The sharp inflow of funds in the last three weeks
of September probably reflected both financial
transactions and marketing of district crops. The
Eighth District, being a predominantly agricultural
region, normally gains funds from the end of
August through December as produce moves out of
the district. On the other hand, the district gen­
*
" X ” balances arise from income tax receipts left temporarily on
deposit at commercial banks by the Treasury, rather than transferred
immediately to the account of tne Treasury at the Reserve Bank.

erally loses funds on balance over the first twothirds of the year.
In addition to the drain on bank reserves due to
a net outflow of funds, banks were also drained of
a sizable amount of funds due to a contraction in
float which centered in the first quarter. Flows of
money into circulation in the weeks before im­
portant holidays likewise absorbed bank reserves.
Some relief from the loss of reserves over the first
half of 1952 was provided by a decline of $35 mil­
lion in required reserves.8 The decline in required
reserves reflected primarily a net outflow of deposits
from the district and a reduction in district deposits
as borrowers repaid bank loans. Reversing their
trend, required reserves rose somewhat in the third
quarter of 1952. The table shows the net change
in factors directly affecting Eighth District member
bank reserves over the first three quarters of 1952
(December 26, 1951, to September 24, 1952).

The drain teas occasioned by net outflows from
banks in the Memphis and Little Rock areas9. . .
Data on flows of funds from each of the 36 areas
of the country to each of the others have only been
available since February 20. From February 20
through September 24 the total net drain on district
member banks from adverse clearings amounted to
$47 million. However, the loss was neither uniform
nor distributed equally throughout the district. In
thirteen of the thirty-one weeks, district banks had
net inflows of funds. Over the period as a whole,
banks in both the Memphis and Little Rock terri­
tories experienced a fairly sharp loss of funds
through the Interdistrict Settlement Fund.
* T h e decline in required reserves volume during the period was not
occasioned by a reduction in reserve requirement percentages.
Legal
reserve requirements remained at 20 per cent o f net demand deposits
for reserve city banks, 14 per cent of net demand deposits at country
banks, and 6 per cent of all time deposits.

FACTORS AFFECTING EIGHTH DISTRICT MEMBER BANK RESERVES

(N E T )

Decem ber 26, 1951, through September 24, 1952
First Quarter
(M illions of Dollars)
Flow of currency into banks .................................
Flow of currency into circulation .......................
Treasury operations ............... ..........................

Added to
Reserves

T otal — ................ ...................................... ..............




Third Quarter
Added to
Reserves

Reduced
Reserves

Total
Added to Reduced
Reserves Reserves
$ 24.3

$ 28.2

1.5
22.4

80.3

$ 18.4

76.3

47.8
33.9

$ 96.6

$ 82.7

$ 19.8
7.1

30.2
8.2
3.3

3.3

$151.7

$134.3
$

-

$ 31.3

17.5

6.1

23.8
1.1

$ +

Page 162

Reduced
Reserves
$

............................................

Change in total reserves..................................
Change in required reserves............ ................

Second Quarter
Added to
Reserves

$ 54.0

Flow of funds into the district.-.................... .......
Flow of funds out of the district..........................
Expansion of Federal Reserve float.......................
Contraction of Federal Reserve float...............
Increased borrowings ..................................................
Reduced borrowings .....................................................
Miscellaneous factors

Reduced
Reserves

9.5
$ 57.8

17.4
-26.6

$ ~ -26.5
- 8 .2

9.2

$ - -18.3

$ 75.6

5.5
$ 35.3

$106.1

$109.7

$ + 4 0 .3

$ —

3.6
17.3

+ 17.5
$ + 22.8

$ + 1 3 .7

Member banks in the Memphis region were
drained of the largest amount of funds, $187 mil­
lion on balance. Memphis region banks had net
outflows of funds to the rest of the Eighth Dis­
trict and to eight of the other eleven Reserve dis­
tricts. And the net outflow from the Memphis area
was fairly uniform over the period. These banks
lost funds on balance in twenty-eight of the thirtyone weeks. However, as the period ended there
was a net inflow of funds to banks in the Memphis
section, probably as a result of the marketing of
cotton.

Largest net outflow went to the financial
centers of Chicago and New York . .

.

The pattern of flows of funds between the Eighth
District and the rest of the nation was similar in
each of the three quarters of the year. The dis­
trict continually lost substantial amounts of funds
to banks in the New York and Chicago areas but
gained funds from most of the rest of the country.

Little Rock territory banks were drained of $46
million by adverse clearings in the period from
February 20 to September 24. However, Little
Rock region banks had a net inflow of funds in
nine of the thirty-one weeks and for the entire pe­
riod they had net inflows from six Federal Reserve
districts.

partially offset by net inflows to banks in the
Louisville and St. Lotus regions.

. . .

Districtwise, the inflow of funds into the St.
Louis and the Louisville territories partly offset the
drains on the other two Eighth District regions.
Member banks in the Louisville region received a
sizable amount of funds net ($140 million) from
interregional transactions in the period from Feb­
ruary 20 through September 24. The gain of funds
was occasioned by heavy inflows from the New
York and Atlanta districts. Banks in Louisville
and surrounding territory received a large amount
of funds from other sections to finance the relatively
large volume of new construction in that area, particulary in and around Paducah, Kentucky.
St. Louis region banks also gained funds through
interregional clearings during the period. Sub­
stantial net outflows to the New York and Chicago
areas were more than offset by net inflows of funds
from most of the remaining areas of the country.
As a result, member banks in the St. Louis section
had a $47 million “ favorable” balance of transac­
tions.
W ith reference to flows between the four Eighth
District regions, funds moved on balance to the
St. Louis region from the other three sections.
The flow totaled $282 million for the thirty-one
week period. Net loss to the Louisville territory
was the greatest. This net flow, which was evident
in each of the three quarters, partially reflected the
fact that St. Louis acts as a financial center for the
district. Between the three branch territories there
were virtually no net movement of funds.




Net loss of funds to the Chicago area was the
greatest, $562 million. For each of the thirtyone weeks the Eighth District had a sizable dollar
deficit with the Chicago portion of the Seventh
District. Over half of this net outflow to Chicago
came from the St. Louis region but the remaining
three district sections had net outflows to Chicago
also.
District member banks also lost a substantial
amount of funds to banks in the New York area.
In the aggregate the net loss to New York was
$445 million. The drain was occasioned by a $763
million net outflow from the St. Louis region offset
in part by sizable net inflows of funds to the Louis­
ville and Memphis territory banks.
Flows of funds between the Eighth District and
the Chicago and New York areas resulted, in part,
from financial transactions.
In addition to the net losses of bank reserves
to Chicago and New York area banks, the district
lost funds on balance to several other areas in the
country. The largest of these adverse clearings was
a $108 million net outflow to the Detroit area. Net
drain of funds to Detroit occurred in twenty-nine
of the thirty-one weeks and was shared in by each
of the four Eighth District sections. The loss of
funds to Detroit probably reflected the purchases
of new automobiles.
Eighth District member banks also were drained
of $73 million as a result of a net outflow of funds
Page 163

to the Cleveland district. This net movement of
funds was occasioned by a net flow of funds from
the Louisville region to the Cincinnati area. Smaller
net outflows of funds from the Eighth District went
to the Philadelphia district ($7 m illion); New Or­
leans area ($20 m illion); San Francisco region
($25 million) ; and the Portland territory ($6 mil­
lion).

Flow of Funds In and Out of
the Eighth District 1
February 21 Through September 24, 1952
(M illions of Dollars)
( + ) Sign Indicates N et Inflow to Area at Top of Column
(— ) Sign Indicates N e t O utflow From Area at Top of Column
Eighth District and Branch Regions
D I S T R I C T S and
Branch R egions
B O S T O N _________ ______

District
Total
+

25

Little
Rock
—

Y O R K .....................

— 433

—

N ew Y o rk ........................

— 445

1

—

NEW

35
36
*

B uffalo...............................

+

12

P H I L A D E L P H I A ........

—

7

+

7

C L E V E L A N D ..................

Louisville Memphis St. Louis
+

17

+ 239
+ 234

13

— 23

—

29

—
—
+

17
17
4

+
+
+
—

26
24
33
32

+
—
—
+

54
12
2
68

+
+
+
+

66
29
13
24

—
—
+

43
19
25

+
+
—

10
25
84

+ 171
+ 21
+ 42
+ 27
+ 39
+ 43

— 188

—

84

— 369

— 130

— 52
— 32

— 356
— 13

30
1
4

—

2

+

34

— 99
— 11
— 80
—
8

R I C H M O N D .....................

+ 174

8
10
2
1

46

+ 51
+ 17
+ 107

+
+
—
—

+

Richmond..........................
Baltimore..........................
Charlotte...........................

+
+
+

24
8
15

A T L A N T A ..........................

+ 304
+ 30
+ 96
+ 96
+ 103
—

20

11
3
*
1
1
12

C H I C A G O ........................... — 670
C h ica g o ........................... — 562
D etroit...... * ...................... — 108

— 28
— 24
—
4

M IN N E A P O L IS
Minneapolis...... ...............
H elena................................

+
+
+

+

2

+

2

K A N S A S C I T Y ............ K ansas C ity.....................
Denver................................
Oklahoma C ity..............
Om aha................................

+ 231
+ 18
+ 38
+ 132

D A L L A S .............................
D allas.................................

+ 306
+ 224
+ 23
+ 56
+
3

E l Paso..............................
H ouston.............................
San A ntonio....................

+

47
39
7

Subtotal....................

31
29
58
37

+

9

1

—

58

+
+

5
4
1

+

12

—
+
+

3
3
11
*

*

+

28

+
+

14
2

+
+

11
2

+
+
+
+

40
24
2
10

+

4

—

9

+

29

—
+
—

11
7
4

+
+
—

9
19
1

+
+

1
1

*

+

43

+
+

36
7

*

— 28
— 16
*
—
+

15
2

47

+ 34
+ 136
+

41

+ 286
+ 208
+ 20

+
—

5
30

+
+

31
27

— 31
—
7
— 21
_
2
*

+

61

—
+

15
54

+
+
+

1
6
16

—

1

8

+ 288

—

91

36

— 146

— 100

1

+
+

—

3

—
—
—

+266
+ 56

— 48
— 22
—
1

—

1
1

—

46

+ 140

1 Figures do not necessarily add due to rounding.
* Less than $500,000.




3
3

+

47

Little R ock......................
Louisville..........................
M em phis............................

Page 164

—
—

—

—

Intra-R egional Flow s
Between
Eighth D istrict R egions
St. Louis...........................

T otal..........................

*

43

S A N F R A N C I S C O , . + 50
San Francisco................ — 25
L o s Angeles..................... + 59
Portland.................. ......... —
6
Salt Lake C ity.............. +
7
Seattle................................ + 16

19
18

—

+ 164
+
+
+
+

+

*

—
—

— 755
— 763
+
8

—

+
—
—

+
+
+

+ 119
+ 120
—
1

23

5
67

Jacksonville......................
Nashville...........................
N ew Orleans..................

6

+

73

+
—

—

5

—

A tlanta...............................
Birmingham.....................

15

+

—
—

Cincinnati.........................
Pittsburgh........................

+

1
3

— 187

— 235

+ 36
+ 146
+ 100
+

47

while on balance funds flowed into the
Eighth District from other areas.

• . .

On the other hand, the Eighth District member
banks gained funds, on balance, from the remain­
ing twenty-two areas of the country from February
20 through September 24. The largest net inflow
of funds came from the Dallas ($306 million) and
Atlanta ($304 million) districts. Other sizable net
inflows came from the Kansas City and the Rich­
mond districts.
Data on interregional flows of funds throw light
on two aspects of the district economy: the mar­
kets for our products together with the sources
of our imports and the nature of commercial bank
operations in the district. With reference to the
first aspect, these data raise an interesting question.
How is it possible to have a persistent net flow in
one direction? Take, for example, the outflow to
Chicago.
Mechanically, of course, a persistent outflow to
Chicago must be balanced with an inflow from
some other area. In other words, the flow of trans­
actions is three-cornered or multi-cornered. The
funds that move to Chicago must continue on to
another region or regions and then return to the
Eighth District. In part the net flows to Chicago
(and to New York) are financial transactions. There
are several types of financial transactions (a term
used here to identify a transfer of funds in ex­
change for other financial claims rather than in ex­
change for goods and services).
For example, some individuals and businesses
in the Eighth District deposit funds in banks in
financial centers. Building up of deposits in these
banks frequently causes drains on Eighth District
bank reserves. On the other hand, withdrawals
from these deposits do not always return to the
Eighth District. Some checks are drawn to pay
bills in other areas.
In a similar manner, many banks in the district
maintain balances w i t h correspondent banks in
financial centers. In building up these accounts,
funds are often moved out of the district. H ow­
ever, these balances in financial centers are used

frequently by district banks to make payments
outside the district.
Also there are many businesses with head offices
outside the district that operate branches within
the Eighth District. In some cases funds are moved
from the branch to the head office, draining the
district of funds. All of these funds do not come
back to the district. Some are used to purchase
materials in other areas; some are used to pay
interest on debt or to give a return to the suppliers
of capital. Financial transactions such as these
help account for the continuous net outflow of
funds from the Eighth District to Chicago and
New York.
The other important contribution of interdistrict
flow data is the light thrown on commercial bank

operations. Bank reserves and the flow of money
payments are at the very heart of the commercial
banking process. A false concept of this dynamic
banking process may be gained if only a static pic­
ture is considered. T o put it another way, the com­
mercial banking process cannot be seen in a single
snapshot; it can only be viewed on motion pictures.
The picture of the flow of funds between this
district and other sections of the country is not
complete. As the pattern emerges and more com­
prehensive data become available, additional in­
sight will be afforded into the complex forces at
work on district member bank reserves and into
the relationship of the district economy to that
of the nation.
N o r m an
N. B o w s h e r

Survey of Current Conditions
HP HE TEM PO of business activity continued to
A quicken in the Eighth District during Septem­
ber and early October. Defense activity expanded
and further improvement resulted in some other
lines from the increased availability of steel items.
Employment increased throughout September and
unemployment reached a postwar low in many areas
o f the district. Construction and industrial produc­
tion remained at high levels although, as might be
expected in a period without the stimulus of infla­
tionary price pressure, not all components of pro­
duction moved in the same direction. Retail sales,
likewise, generally showed improvement in Sep­
tember and early October as compared with August
but with considerable variation between lines. Busi­
ness loans expanded about as usual over the sixweek period.
District production of major crops for 1952, ex­
cept corn and tobacco, was estimated at more than
in 1951, despite the drouth. But pasture conditions
in many parts of the district worsened.
Economic activity in the nation during Septem­
ber also was at a brisker pace than earlier. Indus­
trial production, as measured by the Federal Re­
serve Board index, increased from 215 per cent
o f the 1935-39 average for August to 225 per cent
for September, and exceeded the previous postwar
high reached in April, 1951. Industries which had
previously reduced output in order to adjust their
inventory positions increased output during Sep­
tember. Durable goods production rose 7 per cent




from August to September. Steel production av­
eraged 101.6 per cent of capacity, compared with
92 per cent in August. Automobile output also
increased rapidly in September with 559,000 pas­
senger cars and trucks assembled, the largest
monthly output since June, 1951. Production of
television a n d major household appliances also
increased in September, reflecting increased con­
sumer buying and moderate rebuilding of inven­
tories.
Nondurable manufactures increased from 191 per
cent in August to 194 per cent for September. As
in other industries some of the increased produc­
tion resulted from the rebuilding of depleted inven­
tories at the various levels of distribution as well
as at the manufacturers’ plants.
Coal and crude oil production during September
was at a higher rate than in August and the same
period a year ago. Total mineral output increased
11 per cent from A,ugust to September.
Early in September 62.3 million persons were
employed, leaving only 2.3 per cent of the civilian
labor force unemployed.
The general level of wholesale commodity prices
declined one per cent during September and the
first two weeks in October. The major decreases
were in farm products and processed foods, espe­
cially meats, reflecting the larger supplies being
marketed and in prospect. The average of raw
industrial commodity prices in the spot primary
markets showed little change in September. The
Page 165

average level of retail food prices dropped 1.8 per
cent in the five weeks ended September 30.
The increase in total economic activity in August
and September roughly offset the decline in July
when effects from the steel strike were sharpest.
As a result, total economic activity in the nation
during the third quarter was at about the level of
the previous quarter. National security expendi­
tures did not rise. Small increases in personal con­
sumption and gross private domestic investment
were partially offset by a slight decline in net for­
eign investment.

Empl oyment
The labor market became somewhat tighter dur­
ing September. In part, this tightening resulted
from the withdrawal of students from the labor
market, on the supply side, and from seasonal
expansions and other quickening in many lines of
activity on the demand side.
Nonfarm employment in the nation r o s e by
520,000 to a total of 47.6 million persons in Sep­
tember, a record high for that month, and 600,000
above a year earlier. Continued expansion of manu­
facturing employment and seasonal gains in retail
trade and public school employment were primarily
responsible for the increase from August.
Unemployment in the nation in early September
was estimated at 1.4 million, probably the lowest
level in the postwar period. And the decline in
unemployment which has occurred since the settle­
ment of the steel strike continued throughout Sep­
tember. Claims for unemployment insurance in the
nation for the week ended September 27 totaled

W H O L E S A L E P R IC E S INT H E U NITED ST A T E S
Bureau of Labor
Statistics
(1947-49=100)
Sept.,*52
All Commodities....,
111.7
Farm Products...
106.4
110.5
Foods..................
Other..................
113.1

Aug.,*52Sept.,*51
112.2
113.4
109.9
109.9
110.5
110.9
113.0
114.8

September, 1952
compared with
Aug.,*52
Sept.,*51
— 1%
— 2%
— 3
— 3
-0 -0 -0 — 2

C O N S U M E R P R IC E IN D E X *
Bureau of Labor
Statistics
Sept. 15,
(1935-39=100)
1952
United States.........
190.8
St. Louis............
192.7
Memphis............
192.9

June 15,
1952
189.6
192.7
191.2

Sept. 15,1952
Sept. 15,
compared with
1951 Junel5,*52 Sept. 15,*51
186.6
4- 1%
4- 2%
186.2
- 0+3
189.9
+ 1
+ 2

R E T A IL F O O D *
Bureau of Labor
Sept. 15,
Statistics
1952
(1935-39=100)
233.2
U. S. (51 cities)....
St. Louis..... .
244.3
Little Rock......... 231.6
Louisville...........
221.1
240.8
Memphis............
* New series.

Page 166




Aug. 15,
1952
235.5
249.0
233.6
224.4
243.7

Sept. 15,1952
Sept. 15,
compared with
Aug. 15,*52 Sept. 15,*
J
1951
227.3
— 1%
4- 3%
238.8
— 2
4- 2
223.0
— 1
4 -4
215.6
— 2
4 -3
237.4
— 1
4 -1

657,000, compared with 869,000 four weeks earlier,
a decline of 24 per cent. In the seven district states
claims for state unemployment insurance also de­
clined during September. For the week ended Sep­
tember 27, 118,000 claims were filed, compared with
158,000 in the week ended August 30, a decline of
25 per cent. Insured unemployment was also less
than in September, 1951, in both the nation and
the district states. In this district, the decrease cen­
tered in Illinois, Indiana, Missouri and Tennessee,
while the other district states, Arkansas, Kentucky
and Mississippi, reported higher insured unemploy­
ment than in September, 1951.
Over the past year wage rates have continued
to rise in many industries. In this district hourly
earnings in manufacturing industries have increased
without much change in the differentials between
areas, as indicated in the following table.
A V E R A G E H O U R S A N D E A R N IN G S IN
M A N U F A C T U R IN G IN D U S T R IE S
August, 1952

August, 1951

Area
Hours Earnings
Hours Earnings
$1.66
39.8
$1.58
St. Louis....................................... 40.3
Memphis ................................. ..... 42.5
1.43
42.3
1.37
1.12
41.3
1.09
Little Rock................................... 41.5
United States................................. 40.6
1.67
40.3
1.60
Source: Compiled from reports by state Employment Security Divi­
sions and the United States Bureau of Labor Statistics.

In Louisville total employment continued to in­
crease from August to September and reached a
level 2 per cent higher than in September, 1951.
The increase from August was primarily at plants
producing tobacco, lumber products and furniture,
ordnance, primary and fabricated metal products.
Seasonal influences were largely responsible for the
increased activity at the first two industries men­
tioned above. While metal-working plants had al­
ready expanded employment in August when the
supply of steel improved, some further increase
also was made in September. Employment in con­
struction activity continued to increase from Au­
gust to September and was 17 per cent greater than
a year earlier. The greatest increase in employment
since September, 1951, was in ordnance and powder
manufacturing plants.

I nd u s t r y
The over-all level of district industrial activity
was high in September, although some lines were
below their year-ago rate. There was continuing
improvement in textile and shoe production. Coal
mining increased sharply. Transportation equip­
ment and fabricated metals production gained. And
steel ingot production reached 109 per cent of
theoretical capacity in early October. Some lines,

such as lumber, oil and whiskey showed no signifi­
cant changes, however, and there was a drop in
output in a number of other industries, as noted
below. Since the declines were largely in industries
with fewer employees per unit of output, while
gains were in industries with a high worker-tooutput ratio, industrial employment was favorable,
as noted earlier. In addition, defense output, not
fully reflected in the year-to-year statistics, was
expanding.

Mining— September coal production, reflecting
anticipation of a coal strike and seasonal demand,
jumped 45 per cent over August and 20 per cent
over September, 1951, in district states, according
to preliminary figures.

Cons t r uct ion
Construction activity in the nation during Sep­
tember continued at about the same level as in
August. Total expenditures for new construction
during September of $3.1 billion raised the thirdquarter total to a record level. During the third
quarter private residential building, public utili­
ties construction and all major types of new public
construction (except housing) were greater than in
the same quarter last year.
The number of dwellings started in September
totaled 98,000 units, compared with 99,000 in the
previous month and 96,400 in September, 1951. So




Daily Average*
Sept.,
Aug.,
1952
1951
K .W .H .
K .W .H .
793
886
Little Rock..
169 R
133 R
179 R
Louisville.....------ 3,860
3,806
4,344
Memphis............. 1,346
1,626
1,251
Pine Bluff.... ____
280
345
532
St. Louis............. 4,974
4,790
5,292
Totals............... 11,482
13,766
11,211
* Selected manufacturing firms.
R— Revised.
(K.W .H .
in thous.)

Sept.,
1952
K .W .H .

September, 1952
compared with
Aug.,*52
Sept.,*51
+ 7%
— 4%
— 6
+27
— 11
+ 1
— 17
+ 8
— 47
— 19
— 6
+ 4
— 10%
+ 2%

L O A D S IN T E R C H A N G E D F O R 2 5 R A IL R O A D S
A T S T . L O U IS
First Nine Days
Sept.,*52 Aug.,*52 Sept.,*51 Oct.,*52 Oct.,*51 9 m os.’52
112,994
114,211
112,312
35,363
35,322
986,053
Source: Terminal Railroad Association of St. Louis.

9 mos. *51
1,049,631

C O A L P R O D U C T IO N IN D E X
___________ Unadjusted
Sept., *52
Aug., ’52
197.8 P
112.4 P

1935-39=100
_____________ Adjusted_____________
Sept., *51
Sept., *52
Aug., *52
Sept., *51
161.2
188.4 P
113.5 P
153.5

C R U D E O IL P R O D U C T IO N
Sept.,
(In thousands
1952
ofbbls.)
Arkansas......... ......«... 75.0
Indiana............._____ 33.7
Kentucky..........-------- 32.2
......... 307.8

Daily Average
Sept.,
Aug.,
1952
1951
76.6
76.1
167.0
166.5
33.3
31.2
31.8
32.8
308.8
306.6

September, 1952
compared with
Sept., 51
Aug.,*52
— 2%
— 2%
-0 - 0+ 8
+ 1
— 2
+ 1
- 0—
%
£
1
o
i

Manufacturing — Manufacture of transportation
equipment, textiles and shoes, which had been weak
earlier in the year, showed strength in September.
Fabricated metals production was about 8 per cent
above a month and a year ago, according to the
sample of electric power used. But non-electrical
machinery, stone-clay-glass, and rubber production
dropped substantially from a year ago, and manu­
facture of chemicals and petroleum products and
paper and paper products were reduced in some
areas. As a result, although daily average use of
power at selected industrial firms in six district
cities rose 2 per cent from August, it was 10 per
cent below that of September, 1951. Plants at
Evansville, however, showed a net gain in daily
average use of power compared with 1951 largely
due to increased manufacture of nonelectrical ma­
chinery and transportation equipment and defense
production in those plants.
Steel ingot production was particularly strong.
Furnaces in the St. Louis area for the first three
weeks of October poured out ingot at 109 per cent
of capacity rate. They had been run during Sep­
tember at 96 per cent of capacity.

C O N S U M P T IO N O F E L E C T R IC IT Y

S H O E P R O D U C T IO N IN D E X
1935-39=100
___________ Unadjusted___________
_____________ Adjusted_____________
Aug., *52
July, *52
Aug., *51
Aug., *52
July, *52
Aug., *51
165.4 P
121.3
121.5
170.5 P
126.4
125.3
P— Preliminary.

B U IL D IN G PER M ITS

(Cost in
thousands)
Evansville...........
Little Rock.........
Louisville............
Memphis.............
St. Louis.............
Sept. Totals........
Aug. Totals........

Month of September, 1952
New Construction
______ Repairs, etc.______
Number
Cost
Number
Cost
1952 1951
1952
1951
1952 1951 1952
1951
127 100 $ 231 $ 322
115 114 $ 68 $ 305
50
61
457
596
258 211
165
112
208
152
1,381
1,557
105
88
486
124
2,260 2,542
2,894
5,483
234 192
185
183
328 373
6,029
4,991
321 262
714
766
2,973 3,228 $10,992 $12,949 1,033 867 $1,618 $1,490
3,023 2,923 $10,114 $ 7,812
878 868 $1,084 $1,212

W H O LESA LE TRADE
Line of Commodities
_____ Net Sales______
Data furnished by
Sept., 1952
Bureau of Census,
compared with
U. S. Dept, of Commerce* Aug.,*52
Sept.,*51
Automotive Supplies................ + 1 2 %
4* 16%
Drugs and Chemicals............. + 17
+13
Dry Goods................................. + 1
+ 27
Groceries........... ......................... + 3
+ 10
Hardware................................... + 1 6
+ 14
Tobacco and its Products....... + 3
+15
Miscellaneous............................ + 4
+ 9
**Total All Lines............. + 9%
+16%
*Preliminary.
**Includes certain items not listed above.

_____ Stocks
Sept. 30, 1952
compared with
Sept. 30, 1951
— 1%

—1
2

+ 5
— 14

+ 8

—

6

— 12 %

far this year a total of 866,800 new dwelling units
have been started, practically the same number as
last year. However, the number of starts in the
third quarter were 9 per cent greater than in the
third quarter last year.
In the Eighth District, total construction con­
tracts awarded during S e p te m b e r totaled $518
Page 167

D EPARTM ENT STO R ES
Stock
Stocks
Net Sales
Turnover
on Hand
Sept., 1952
9 mos.’52 Sept, 30/52
Jan. 1 to
compared with
to same comp, with
Sept. 30,
Aug.,*52 Sept.,’51 period ’51 Sept. 30/51 1952 1951
8th F. R. District... + 8%
+ 4%
+ 2%
— 2%
2.72
2.42
Ft. Smith, Ark.1.... +19
+ 1
+ 1
— 8
2.58
2.41
Little Rock, Ark.... +11
+ 6
+ 4
— 5
2.71
2.32
Quincy, 111.............. + 2
— 5
— 6
— 7
2.72
2.45
Evansville, Ind...... — 11
+ 7
+ 5
Na
Na
Na
Louisville, Ky........+13
+ 7
+ 4
+10
2.83
2.75
Paducah, Ky.......... +10
+ 17
+28
.......
.....................
St. Louis Area1 *.... + 7
+ 3
+ 2
— 6
2.70
2.32
Springfield, Mo..... + 4
— 3
+ 3
+ 2
2.42
2.14
Memphis, Tenn..... + 1 2
+ 5
+ 3
+ 2
2.87
2.71
All Other Cities*.... + 2
+ 2
+ 5
+ 4
2.33
2.23
1 In 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.
2 Includes St. Louis, Clayton, Maplewood, Missouri; Alton and Belle­
ville, Illinois.
*
Fayetteville, Pine Bluff, Arkansas; Harrisburg, Mt. Vernon, Illinois;
Vincennes, Indiana; Danville, Hopkinsville, Mayfield, Kentucky; Chillicothe, Missouri; Greenville, Mississippi; and Jackson, Tennessee.
OUTSTANDING ORDERS of reporting stores at the end of Sep­
tember, 1952, were 42 per cent larger than on the corresponding date
a year ago.
PERCENTAGE OF ACCOUNTS AND NOTES RECEIVABLE
Outstanding September 1, 1952, collected during September, by cities
Instalment Excl. Instal.
Instalment Excl. Instal.
Accounts
Accounts
Accounts
Accounts
Fort Smith.........
Quincy ......... 20%
45%
65%
44
Little Rock.... 16
St. Louis ..... 20
51
47
Other Cities ..1 3
48
Louisville ...... 20
Memphis ...... 23
38
8th F.R. Dist. 19
47
IN D E X E S OF DEPARTM ENT STORE SALES AND STOCKS
8th Federal Reserve District
Sept., Aug., July, Sept.,
1952
1952
1952
1951
110
98
81
111
104
110
99
105
140
125
112
134
, 132
129
120
127
Stock, seasonally adjusted 4......................
8 Daily average 1947-49 = 100.
4 End of Month Average 1947-49 = 100.

S P E C IA L T Y S T O R E S
Net Sales
Sept., 1952
compared with
Aug./52 Sept./51
Men’s Furnishings + 8%
— 5%
Boots and Shoes.... + 24
+ 4

Stocks
Stock
on Hand
Turnover
9 mos/52 Sept. 30/52
Jan. 1 to
to same comp, with
Sept. 30
period ’51 Sept. 30/51 1952 1951
— 1%
— 11%
1.56
1.36
+ 2
+ 7
3.08
2.95

PERCENTAGE OF ACCOUNTS AND NOTES RECEIVABLE
Outstanding Sept. 1, 1952, collected during September
Men’s Furnishings................... 42%
Boots and Shoes...................38%
Trading days: Sept., 1952— 25; Aug., 1952— 26; Sept., 1951—24.

R E TA IL F U R N IT U R E ST O R E S
Net Sales
Inventories
September, 1952 September, 1952
Ratio of
compared with
Collections
compared with
Aug./52 Sept./51 Aug./52 Sept./51 Sept./52 Sept./51
8th Dist. Total1...... — 2% + 5%
+ 3% + 2%
23%
25%
St. Louis Area2....... - 0 -0 + 4
+ 1
57
57
St. Louis......... .... - 0 + 4
-0 + 1
60
60
Louisville Area3..... — 12
— 5
+ 7
+ 4
14
12
Louisville........ ... — 13
— 6
+ 7
+ 6
11
13
Memphis..............
+ 10
- 0— 16
13
14
Little Rock......... .... — 4
+ 15
+ 6
+ 8
19
21
Springfield...........
-0 — 1
-0 16
14
*
*
*
*
Fort Smith.......... ... + 2
+ 20
* Not shown separately due to insufficient coverage, but included in
Eighth District totals.
1 In addition to following cities, includes stores in Blytheville, Pine
Bluff, Arkansas; Hopkinsville, Owensboro, Kentucky; Greenwood,
Mississippi; Hannibal, Missouri; and Evansville, Indiana.
2 Includes St. Louis, Missouri; and Alton, Illinois.
3 Includes Louisville, Kentucky; and New Albany, Indiana.
PERCENTAGE D ISTR IBU TIO N OF FURNITURE SALES
Sept., ’52 Aug., *52 Sept., *51
Cash Sales........................................................ 16%
15%
14%
Credit Sales ...................................................... 84
85
86
Total Sales......................................... . 100%
100%
100%

Page 168




million, and included the $459 million contract for
the expansion of the Paducah Atomic Energy Com­
mission plant. For the first nine months, work con­
tracted for totaled $1,318 million, compared with
$1,111 million in the corresponding period of 1951.
Contracts awarded for public works, manufactur­
ing buildings, and public buildings in the first nine
months this year were about double the amount
contracted in the same period last year. But hos­
pital and institutional building was off 42 per cent.
While residential construction contracts have been
awarded at about the same rate as last year, those
for apartment buildings and dormitories have been
substantially less. The increase in one family dwell­
ings for sale or rent has more than offset these
declines. Construction of residences for owner oc­
cupancy remained at about the same rate as last
year.

Trade
Retail sales generally showed improvement in
September over August, but there was much varia­
tion. Apparel and department store sales were up
from August, but the gain was less than usual in
the latter. In contrast, furniture store sales de­
clined. In comparison with a year ago, sales at
both department and furniture stores were higher,
but at apparel stores were lower. Thus, the rather
spotty pattern that has developed over the summer
was continued into early fall.
Sales at auto dealers in September increased as
deliveries improved during the month. However,
the pattern of sales was not uniform. Used car
dealers reported that new car dealers were selling
a larger share of trade-ins themselves. Sales of
appliances were relatively slow in the month, this
being attributed to a reaction from the abovenormal buying during the preceding hot months.
The effect of seasonal promotions at district de­
partment and apparel stores during the month was
somewhat limited as weather conditions continued
mild and dry in many portions of the district. As
a result, sales in these stores gained less than
seasonally from August. Department store sales,
while 8 per cent greater than in August, declined
on a seasonally adjusted basis from 110 per cent
of the 1947-49 base period in August to 104 per
cent in September. In September, 1951, they were
105 per cent of the base period. Preliminary re­
ports through mid-October indicate that the 3 per
cent cumulative 1952 rate of increase over 1951 will
be maintained in the month.
At furniture stores throughout the district Sep­
tember sales volume dropped slightly below that

in August but was 5 per cent over that in Septem­
ber, 1951. Indications were that much of the
strength in sales over a year ago was in furniture
lines with appliance sales lagging.
Inventories held on September 30 by reporting
department stores, furniture stores and apparel
stores were somewhat larger than a month earlier.
On September 30 the retail value of inventories
at furniture stores was greater than a year earlier.
Apparel store and department store inventories
were somewhat below those a year ago.
The volume of outstanding orders at district de­
partment stores on September 30 was 2 per cent
below that at the end of August and was 42 per
cent larger than a year ago.

Banking and Finanee
Business loans expanded about the seasonal
amount at district banks in the six weeks to midOctober. These loans were up less than usual dur­
ing early October in contrast to a sharp growth
in September. Both real estate and consumer loans
continued to climb. Volume of checks written dur­
ing September rose substantially, reflecting an in­
creased use of both business and Government ac­
counts.
District Banking— For district bank lending of­
ficers, autumn is a time of brisk activity. Both
volume of new business loans and amounts of busi­
ness loans outstanding increase in the period. The
seasonal pattern reflects in large measure the de­
mand for funds to harvest, market and process

farm produce. In addition, some funds are nor­
mally needed in the fall to stock up for the Christ­
mas season.
The autumn growth in business loans, however,
is somewhat different each year. Both size and
time of harvesting of crops vary from year to year.
Market prices fluctuate. Retailers and wholesalers
build up inventories at different times and to
varying extents. As a result, gauging the size of
each autumnal growth in business loans is as
difficult as it is important.
During August, September and early October,
businesses in the district expanded their borrow­
ings as usual at this time. However, the growth
was uneven. Over August and September the in­
crease in business loans was sharp—much more
than normal. By contrast, in early October the
growth was less than usual. As a result, over the
entire two-and-a-half months, business loans at dis­
trict banks showed their “ normal” growth.
The sharp increase in loans (seasonally adjusted
basis) during August and September was the net
result of several factors. The gain in August and
the first half of September primarily reflected an
increase in outstanding loans to sales finance com­
panies, manufacturers of textile, apparel and leather
goods and contractors. This gain was partially off­
set by the behavior of loans to food manufacturers
and commodity dealers. In the last two weeks of
September the pattern of growth was different.
Here it centered in a sharp increase in borrowings
by commodity dealers, largely on cotton at Mem­
phis. In early October there were net repayments

EIG H TH D ISTR IC T M E M B ER B A N K A S S E T S A N D LIAB ILITIES B Y S E L E C T E D G R O U P S
All Member
(In Millions of Dollars)
Assets

Sept.,*52

Large City Banks1

Change from:
Aug.,*52 Sept.,'51
to
to
Sept.,*52 Sept.,*52

Sept.,*52

3. Other Assets..................................... .

$4,359
2,004
1,954
401
1,467
744
723
52

$+
+
—
—
+
+
+
—

54
66
7
5
98
30
68
1

$+284
+ 151
+ 101
+ 32
+ 72
+ 60
+ 12
+ 4

$2,533
1,325
1,013
195
930
493
437
32

$+
+
—
—
+
+
+
—

4. Total Assets..................... ...........................

$5,878

$ + 151

$+360

$3,495

6.
7. Borrowings and Other Liabilities.............
8. Total Capital Accounts........................... -

$4,341
722
3,619
1,041
112
384

$+157
+ 87
+ 70
+ 4
— 18
+ 8

$+221
+ 65
+ 156
+ 59
+ 61
+ 19

9. Total Liabilities and Capital Accounts....

$5,878

$+151

$+360

1. Loans and Investments.............................
a. Loans ........................................................
b. U.S. Government Obligations.............
c. Other Securities .......—......................
2. Reserves and Other Cash Balances..........
a. Reserves with the F.R. Bank...............

Liabilities and Capital
5. Gross Demand Deposits.............................
a. Deposits of Banks....-............... ..............

Smaller Banks 2

Change from:
Aug.,'52
Sept./51
to
to
Sept.,*52 Sept.,*52

Sept.,*52

171
103
47
21
54
50
4
3

$1,826
679
941
206
537
251
286
20

$+
+
+
+
+
+
+
-

$ + 114

$ + 228

$2,383

$ + 37

$ + 132

$2,670
679
1,991
502
102
221

$+130
+ 81
+ 49
+
2
— 20
+
2

$+
+
+
+
+
+

136
61
75
21
59
12

$1,673
43
1,628
539
10
163

$ + 27
+
6
+ 21
+
2
+
2
+
6

$ + 85
+
4
+ 81
+ 38
+
2
+
7

$3,495

$+114

$+228

$2,383

$ + 37

$+132

27
55
19
9
88
28
60
1

$+
+
+
+
+
+
+
+

Change from:
Aug.,*52 Sept./51
to
to
Sept.,*52 Sept.,*52
27
11
12
4
10
2
8
0 -

$+
+
+
+
+
+
+
+

113
48
54
11
18
10
8
1

1 Includes 13 St. Louis, 6 Louisville, 3 Memphis, 3 Evansville, 4 Little Rock, and 4 East St. Louis-National Stock Yards, Illinois, banks.
2 Includes all other Eighth District member banks. Some of these banks are located in smaller urban centers, but the majority are rural area banks.
3 Includes vault cash, balances with other banks in the United States, and cash items reported in process of collection.




Page 169

by sales finance companies and textile, apparel and
leather manufacturers.
Both real estate and consumer loans continued
to expand at district banks from mid-September to
mid-October. Banks at all weekly reporting centers
shared in the gains.

A g r i cu l t ur e
District agricultural reports were both encourag­
ing and discouraging for September and early Octo­
ber. The outturn of 1952 crops generally, with the
exception of corn, was more favorable than earlier
reports had indicated. However, drouth again had
dried up pastures in Missouri and Arkansas and to
a lesser extent had cut pasture production in district
states east of the Mississippi River. Late hay pro­
duction was reduced and water for stock was scarce
in some areas. Even more serious was the fact that
top soil was too dry for fall-sown pasture seeds and
fall-sown wheat to make any growth or in some
instances to germinate.
Cotton— The extremely dry weather was nearly
perfect for maturing and harvesting 1952 crops.
Estimated district cotton production on October
1 is 250,000 bales higher than the S ep tem b er
estimate, an 8 per cent increase for the month and
a 7 per cent increase over the 1951 crop. The crop
in Missouri deteriorated slightly during the month,
but this decline was more than offset by improved
crop prospects in other district states. The October
estimate for the nation is 524,000 bales more than
that of September, but falls short of 1951 produc­
tion by 731,000 bales, or 5 per cent.
E STIM A T E D P R O D U C T IO N FO R M AJO R C R O P S ,
EIG H TH D IST R IC T , O C T O B E R 1, 1 9 5 2
Estimated
Production
Oct. 1, 1952
(In thousands)
Corn (b u .)....................
Oats (bu.) ....................
Soybeans (bu.)............. .....
88,209
Rice (bags)...................
Cotton (bales)............. .
Burley tobacco (lbs.)........ 197,038
Source: Adapted from C r o p P r o d u c t i o n ,

Per Cent
Change
Per Cent
From
Change
Previous
From 1951
Month
— 8%
— 11%
-0 + 3
+ 3
+ 7
+ 8
+ 2
+ 8
+ 7
— 1
-0 U. S. D. A., October, 1952.

Corn— Prospects for district corn production de­
clined 8 per cent during September in contrast to
a 2 per cent increase nationally. Slight improve­
ment of the corn crop in Indiana and Illinois during
the month was more than offset by a decline in
Missouri and further deterioration of the already
poor crops in Kentucky and Mississippi. Compared
with 1951, the 1952 district crop is 11 per cent
smaller. Nationally, however, the crop is 11 per
cent larger and is also of much better quality than
the 1951 crop.
Page 170




Farm Real Estate— Farm real estate prices rose
1 per cent both nationally and in the Eighth Dis­
trict from March to July, 1952. Not since the out­
break of the Korean W ar has the rise in any threemonth period been so small. No rise was indicated
for Mississippi and Tennessee, and farm land prices
declined 2 per cent in Missouri. The 5 per cent
increase for the year ending July 1, 1952, compares
with a 17 per cent increase for the year ending:
July 1, 1951.
FARM REAL. E S T A T E P R IC E S

Arkansas...........................................
Illinois..............................................
Indiana.............................................
Kentucky.........................................
Mississippi......... .............................
Missouri...........................................
Tennessee.........................................
Eighth District...............................
United States..................................
Source: T h e F a r m R e a l E s t a t e

Per cent
Per cent
change
change
March to
July, 1951, to
July, 1952
July, 1952
+ 14%
..
+ 1%
..
+ 3
+ 9
,
+ 1
+ 8
..
+ 3
+ 8
.. - 0 + 5
.. — 2
+ 5
... - o + 3
.. + 1
+ 6
,.
+ 1
+ 5
M a r k e t , B.A.E., September, 1952.

D EBITS TO D E P O SIT A C C O U N T S
Aug.,
Sept.,
Sept.,
(In thousands
1952
1952
of dollars)
1951
El Dorado, Ark............ $ 26,778 $ 25,937 $ 26,950
48,171
45,112
Fort Smith, Ark..........
44,877
11,206
6,189
Helena, Ark..................
9,119
167,761
130,664
Little Rock, Ark..........
135,219
49,513
35,648
Pine Bluff, Ark............
34,028
20,316
17,984
Texarkana, Ark.*.........
15,465
32,137
31,021
27,839
Alton, 111.......................
138,397
E.St.L.-Nat.S.Y., 111...
118,865
132,722
34,838
33,437
32,116
Quincy, 111....................
149,126
Evansville, Ind............
130,072
125,318
Louisville, Ky..............
682,040
659,788
602,547
42,831
Owensboro, Ky............
37,328
43,824
44,106
Paducah, Ky.................
42,113
26,724
Greenville, Miss...........
29,585
18,393
23,298
Cape Girardeau, Mo....
12,904
12,068
12,746
Hannibal, Mo...............
9,404
9,199
10,030
Jefferson City, Mo.......
57,392
52,115
52,816
St. Louis, Mo............... 1,970,669 1,654,776 1,702,651
Sedalia, Mo.................. .
11,861
11,008
11,018
Springfield, Mo............
68,436
61,455
74,583
Jackson, Tenn..............
23,149
19,870
21,353
Memphis, Tenn............
742,876
483,157
571,366
Totals........................ $4,373,496 $3,636,199 $3,736,609

Sept., 1952
compared with
+ 3%
+ 7
+ 81
+ 28
+ 39
+ 13
+ 4
+ 16
+ 4
+ 15
+ 3
+ 15
+ 5
+ 61
+ 7
+ 2
+ 10
+ 19
+ 8
+ 11
+ 17
+ 54
+20%

_
+
+
+
+
+
+
+
+
+
+

—
+
+
+

—
+
+
+

_

+
+
+

1%
7
23
24
46
31
15
4
8
19
13
2
65
27
1
6
9
16
8
8
8
30
17%

* These figures are for Texarkana, Arkansas, only. Total debits for
banks in Texarkana, Texas-Arkansas, including banks in the Eleventh
District, amounted to $41,780.

C A S H FARM IN C O M E

(In thousands
of dollars)

Aug.,
1952
$ 23,828
, 145,869
95,001
...
39,229
....
32,464
.... 32,530
.... $455,822

August, 1952
compared with
July, Aug.,
1952
1951
— 11% — 11%
+ 7
— 7
— 7
+ 27
+ 21
+ 8
+ 40
+ 9
+ 16
— 17
— 4
— 5
+ 13% — 7%

8 mo. total Jan. thru August
1952
compared with
1952
1950
1951
$ 240,443 + 10% + 37%
1,219,469 — 3
+ 12
677,069 — 3
+ 16
321,333 — 2
+ 8
189,734 _ i
+43
623,009 — 13
+ 7
254,160 - 0 + 19
$3,525,217 — 3% + 15%

R E C E IP T S A N D S H IP M E N T S
A T N A T IO N A L S T O C K Y A R D S

Sept.,
1952
Cattle and calves.... 169,743
Hogs....................... 218,189
Sheep...................... 78,866
Totals................. 466,798

Receipts
Shipments
September, *52
September, ’52
compared with
Sept.,
compared with
Aug.,’52 Sept.,’51
1952 Aug.,*52 Sept.,*51
+ 31% + 1 8 %
72,951 + 1 3 % —11°/
+ 21
— 7
31,947 — 47
— 53
+ 9
+ 60
40.437 — 15
+ 39
-18%
+ 22% + 9%
145,335
-16%