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November 1964
ANK OF ST. LOUIS
mMtmmn
jarfiaiiiiwiii
CONTENTS
Money Supply in Five
Countries, 1951-1964..
Page
ill:
1
1
ii®
ill
Production and Money
Expand Rapidly—with
neither Price Inflation
nor interest Rate In
creases
Employment and Popula
tion Trends in the Cen
tra Mississippi Valley 10
Economic Indicators—St.
Louis and Louisville..
' f il l;
lif t;
15
evtew
Money Supply in Five
Countries, 1951-1964
-ONEY SUPPLY ST A T IST IC S1 for five leading industrial na
tions are presented in the accompanying tables and charts. It is
hoped that readers may find the data, presented in the manner
outlined below, more useful than in their original form.2 Although
the major interest in studying money supply behavior lies in relat
ing it to economic activity, this has not been done in this pre
liminary article.3 However, readers who have followed the finan
cial history of the respective countries may find that they can
infer the causes of variation in the rate of change of money supply
from time to time or the possible economic effects of this variation.
According to one view, monetary policy is “policy employing
the central bank's control of the supply of money as an instru
ment for achieving the objectives of general economic policy/ 4 It
is not assumed in this article that any or all of these countries at
any or all times necessarily sought to achieve a certain increase
or decrease in the money supply. Rather, money supply data are
presented in a manner that may be more readily used by any who
think that money supply changes may be one useful ex post indi-
Volume 46
•
Number 11
FEDERAL RESERVE BANK
OF ST. LOWS
P.O. BOX 4 4 2 , St. Louis, Ate. 6 3 1 66
1 Data for the four foreign countries are derived from International Financial Statis
tics, published by the International Monetary Fund. For the U. S., Federal Re
serve Board data are used.
2 See this R eview , September 1964, for a similar presentation covering U. S. mon
etary experience since 1914.
3 For a discussion of the rough relationship between recent monetary change and
other economic variables in five foreign countries, see this R eview , August 1964,
p. 6.
4 Harry Johnson, “Monetary Theory and Policy,” T he American E con om ic R eview ,
Vol. L II, No. 3, June 1962, p. 335.
Money Supply in Five
Annual Rates of Change
Per C en t
Per Cent
U nited S ta te s
10 r
L
- - - - - - - - j- - - - - - - 1
1
i
r
■ i
!
10
i
r\
(
--
i
!
i
J
i
0
-10
Canada
G e rm a n y
..."
U nited K in g d o m
!
|
1
!
j
L
y — — 2i_|- - - - - - - - - - y - - - - - - - - X
1
1951
19 5 2
:
!
1
„
A
1954
1955
1956
rv
!
.
.
-
1958
V—
L
s
/\
/^ \
- -- - - - - - - - - - - - - - - - - - -
.1
1957
T h e p lo tte d lin es r e p re se n t 3 -m o n th m o v in g a v e ra g e s o f a n n u a l r a te s o f
c h a n g e , w e ig h te d 1 - 2 - 1 , co m p u te d fro m s e a s o n a lly a d ju s te d d a ta .
B a r s in d ica te a v e r a g e ra te s fo r p e rio d s o f n o m a rk e d a n d su s ta in e d c h a n g e
in th e r a te o f c h a n g e ( d a t a in T a b le s I to V ) .
S h a d e d a re a s re p re se n t p e rio d s o f b u sin ess r e c e s s io n .
Page 2
!
!
1
i
19 53
!
V |V
1
i
K /~
---
i
1959
1960
1961
1962
1963
1964
D a t a fo r th e U n ite d S ta te s a r e p ro v id e d by th e B o a r d o f G o v e rn o r s o f th e
F e d e r a l R e s e rv e S y ste m .
D a t a fo r th e f o u r o th e r co u n trie s a r e ta k e n f r o m I n te r n a t io n a l F in a n c ia l
S ta tis tics , p u b lis h e d by th e I n te r n a tio n a l M o n e ta r y F u n d .
Table III
Countries, 1 951 -1 9 6 4
FRANCE
Compounded Annual Rates of Change
Periods of No Marked and Sustained
Change in the Rate of Change
(Represented by bars on charts)
Annual Rate
of Change
Table I
D ec. 1 9 5 0 - Ju n e 1 9 6 4 ...........................................................................
UNITED STATES
Compounded Annua! Rates of Change
1 2 .6 %
Dec. 1950 - Oct. 1951 ....................................................................................
18.7
Oct. 1951 - July 1956 ....................................................................................
12.8
7.8
Dec. 1950 - June 1964 .........................................................
2 .2 %
Ju ly 1956 - Mar. 1960 ....................................................................................
Ju ly 1956 - Feb. 1957 ...........................................
4.2
Feb. 1957 - Oct. 1957 ............................................ 11.3
3.8
Oct. 1957 - Oct. 1958 ...........................................
Oct. 1958 - Mar. 1960 ...........................................
10.8
Dec. 1950 - A pr. 1953 ....................................................................................
4.3
Mar. 1960 - Sept. 1963 .................................................................................
16.7
A pr. 1953 - Apr. 1954 ....................................................................................
0.3
Sept. 1963 - June 1964 .................................................................................
8.4
A pr. 1954 - May 1955 ....................................................................................
4.3
May 1955 - Dec. 1956 ....................................................................................
1.1
Periods of No Marked and Sustained
Change in the Rate of Change
{Represented by bars on charts)
Annual Rate
of Change
Table IV
Dec. 1956 - Jan. 1958 .................... .............................................................. ......— 0.9
Jan. 1958 - June 1959 ....................................................................................
Ju re 1959 - June 1960 ..........................................................................................— 2.3
June 1960 - June 1964 ................................................. ..............................
June 1960 - Jan. 1962 ...........................................
2.4
Ja n . 1962 - Sept. 1962 .........................................
0.3
Sept. 1962 - June 1964 ........................................
3.8
GERMANY
4.1
2.7
Compounded Annual Rates of Change
Periods of No Marked and Sustained
Change in the Rate of Change
(Represented by bars on charts)
Annual Rate
of Change^
D ec. 1 9 5 0 - Ju n e 1 9 6 4 ................................................................................... 1 0 .6 %
Dec. 1950 - Apr. 1951 ....................................................................................
6.6
Apr. 1951 - Feb. 1952 ............................................................................................22.2
Feb. 1952 - Jan. 1956 ............................................................................................ 10.5
Jan. 1956 - Feb. 1957 ....................................................................................
6.2
Feb. 1957 - Aug. 1959 .........................................................................................14.0
T a b le II
CANADA
Compounded Annual Rates of Change
Periods of No Marked and Sustained
Change in the Rate of Change
(Represented by bars on charts)
D e c. 1 9 5 0 - Ju n e 1 9 6 4 ...........................................................................
6.6
Dec. 1960 - June 1964 .................................................................................
Dec. 1960 - Dec. 1961 ......................................... 13.6
Dec. 1961 - Nov. 1962 .........................................
8.2
Nov. 1962 - Apr. 1963 .........................................
3.4
Apr. 1963 - June 1964 .........................................
9.5
9.6
Annual Rate
of Change
Table V
4 .6 %
Dec. 1950 - Sept. 1951 ................................................................................. ...... — 2.0
Sept. 1951 - M ay 1953 ....................................................................................
6.1
M ay 1953 - Nov. 1953 .................................................................................
— 8.9
Nov. 1953 - Ju ly 1955 ....................................................................................
Nov. 1953 - Oct. 1954 ...........................................
6.1
Oct. 1954 - Ju ly 1955 .............................................. 20.2
12.4
Ju ly 1955 - Aug. 1957 .................................................................................
Ju ly 1955 - Ja n . 1956 ............................................— 7.7
Ja n . 1956 - Aug. 1956 ...........................................
3.2
Aug. 1956 - Aug. 1957 .........................................— 3.7
— 2.7
UNITED KINGDOM
Compounded Annual Rates of Change
Periods of No Marked and Sustained
Change in the Rate of Change
{Represented by bars on charts)
M arch 1 951 - J u n e 1 9 6 4
.....................................................................
March 1951 - Ja n. 1952 .................................................................................
Aug. 1957 - Oct. 1958 .................................................................................
Aug. 1957 - M ay 1958 ......................................... 12.6
M ay 1958 - Oct. 1958 ............................................ 18.6
15.3
Oct. 1958 - Nov. 1959 .................................................................................
— 4.3
Nov. 1959 - June 1964 .................................................................................
Nov. 1959 - Nov. 1960 ........................................
4.3
Nov. 1960 - Nov. 1961 ......................................... 13.0
Nov. 1961 - Ju ly 1962 ............................................— 2.0
Ju ly 1962 - May 1963 ............................................ 12.3
M ay 1963 - Sept. 1963 .........................................— 0.7
Sept. 1963 - June 1964 .........................................
8.7
7.0
Aug. 1959 - Dec. 1960 .................................................................................
Aug. 1959 - June 1960 .........................................
8.3
June 1960 - Dec. 1960 .........................................
3.6
Annua! Rate
of Change
2 .5 %
— 2.1
Ja n. 1952 - Feb. 1955 ....................................................................................
3.4
Feb. 1955 - Apr. 1956 ....................................................................................
— 3.0
Apr. 1956 - June 1959 .................................................................................
2.8
June 1959 - Ja n. 1960 ....................................................................................
8.6
Jan. 1960 - Dec. 1960 ....................................................................................
0.8
Dec. 1960 - June 1963 ....................................................................................
Dec. 1960 - June 1961 .........................................
5.9
June 1961 - Dec. 1961 .........................................— 0.3
Dec. 1961 - Nov. 1962 .........................................
2.5
Nov. 1962 - June 1963 .........................................
4.4
3.1
June 1963 - June 1964 .................................................................................
6.2
Page 3
cator of monetary policy or action or who wish to
study the relation between money supply and other
economic variables. To the extent that money supply
behavior relates to levels and changes of prices, in
come, and interest rates within a country, foreign
monetary experience may be of considerable impor
tance in affecting international trade and capital flows
and hence have a significant effect on the U. S. balance
of payments.
The basic data, seasonally adjusted by the IMF,
have been refined and presented in the following
manner:
1. Three-month moving averages, weighted 1-2-1,
of month-to-month annual rates of change in the
money supply have been computed and plotted. The
three-month averages serve to smooth short-term vari
ation in changes in the rate of change of the money
supply with an acceptable minimum distortion in the
timing of changes.
2. Periods of time have been chosen in which no
marked and sustained change in the rate of change of
the money supply for each country occurred.
3. The average annual compounded rate of change
in the money supply has been computed on the basis
of the 1-2-1 moving average of the money stock at the
beginning and end of each period chosen as outlined
in (2). This rate of change then establishes the ver
tical position of each bar plotted.
Questions as to comparability of the basic data for
each country over the whole period studied, or as
between different countries, might be raised. How
ever, in view of the long experience and effort of the
IMF to present reliable figures based on a consistent
definition of money,5 it is presumed that the data are
sufficiently comparable to merit the use made of them
here.
Canada
Since 1950, the Canadian money supply has in
creased at an average annual rate of 4.6 per cent. Dur
ing this period, there have been wide variations in the
rate of monetary expansion. Compared to the other
5 “. . . The term M oney Supply refers to free currency and free
deposits subject to check owned by the public, i.e., owned by
others than banks and the central Government. Deposits in
postal institutions are included if they are subject to check,
and deposits held on foreign account are also included/' Inter
national Financial Statistics, Vol. L No, 2, n, vi, 1948. This
definition is approximately the same as that used by the Fed
eral Reserve System.
Page 4
countries studied here, fluctuations in the rate of
change of the money supply have been both more nu
merous and more pronounced. In particular, since
mid-1953, there has been a marked absence of rela
tively long periods of stable monetary growth. Over
the same period, however, extreme high and low rates
of monetary change have tended to moderate.
Since September 1963, the 8.7 per cent rate of mon
etary growth in Canada has been rather high in com
parison with both the 4.6 per cent rate of growth for
the whole period since 1950 and recent experience in
the United States and the United Kingdom.
F ranee
The French money supply has increased at an aver
age annual rate of 12.6 per cent since 1950, For over
four years, from late 1951 to mid-1956, the rate of
monetary growth was about 13 per cent. Then, from
July 1956 to March 1960, the overall growth rate was
significantly lower, averaging 7.8 per cent. Within
this period of almost four years, there were two pe
riods when money was increasing at about a 4 per
cent annual rate and two periods when the rate of
increase was about 11 per cent per annum. The sec
ond major period of stable monetary growth, from
March 1960 to September 1963, was marked by an
exceptionally high annual rate of 17 per cent.
During the past year, monetary expansion has fallen
sharply. Although still high by comparison with the
United States or the United Kingdom, French mon
etary growth since September 1963 has been at an 8.4
per cent annual rate, significantly lower than the aver
age for the past 13 years.
G erm any
The 10.6 per cent annual rate of increase in the Ger
man money supply since 1950 has been nearly as
great as that of France. However, there has been more
variation in the rate of growth over this period for
Germany than for France.
From 1951 to early 1957, monetary expansion was
progressively more restrained, falling from 22 per cent
per annum in April 1951-February 1952 to a 6 per cent
annual rate of increase from January 1956 to February
1957. Since early 1957, changes in the rate of growth
have become more variable, both as to amount and
frequency of change.
The period from February 1957 to August 1959 was
one of greater than average growth. Monetary growth
was then relatively slow for 16 months up to December
1960. Since December 1960, the increase in the money
supply has averaged 9.6 per cent per annum. At no
time during the 13/2-year period did the annual rate of
monetary expansion fall below 6 per cent for any sus
tained period.
United K ingdom
The 2.5 per cent annual rate of growth in the British
money supply since 1951 has been comparable with
that in the United States and quite low compared
with the other countries covered in this article. From
early 1951 to mid-1959, there were two relatively
prolonged periods of stable monetary growth and two
brief periods in which the money supply actually de
clined. Over the following five years, from mid-1959
to mid-1964, there were more frequent changes in the
rate of change in the money supply. During the period
as a whole, the annual rate of increase averaged 3.8
per cent. Since June of 1963, the money supply has
grown at about a 6 per cent rate, higher than in any
other period of comparable length since 1951.
United States
Since 1951, a recurrent pattern has marked the
course of monetary expansion in the United States.
Typically, periods of successively lower rates of in
crease of money have occurred during periods of
economic expansion. During recessions, the rate of
monetary growth at some point has risen. Since 1951,
there have been two periods when the money supply
decreased—December 1956-January 1958 and June
1959-June 1960. Compared with the four other coun
tries considered here, variation in rates of U. S. mon
etary change has been much less marked.
S um m ary
Over the entire period 1951-64, monetary growth
has occurred at diverse rates in the five countries
covered in this article. Many factors—e.g., the rate of
economic growth; structural problems arising from
wartime dislocations; types of stabilization problems,
goals, and available policy instruments; different fi
nancial institutions and practices—might be considered
to explain these national differences or to appraise
the appropriateness of the long-run rates of monetary
expansion which did take place.
During various shorter periods of time, a wide va
riety of rates of monetary growth can be observed
(Table VI). These differing rates of monetary change
Table VI
MONEY SUPPLY
Annual Rate of Change
Prevailing at
Mid-1954 Mid-1964
Canada .............................................................................
France ...............................................................................
Germany ..........................................................................
United Kingdom .............................................................
United States ..................................................................
6.1
12.8
10.5
3.4
1.8
8.7
8.4
9.5
6.2
3.8
largely reflect the fact that cyclical economic develop
ments are not parallel in all countries. Thus, rates of
monetary growth prevailing as of June 1954 were quite
low in the United States and the United Kingdom
relative to France and Germany. A decade later this
disparity was much less marked. Compared either
with experience ten years earlier or with respective
rates of monetary growth over the entire period being
considered, monetary expansion as of June 1964 was
lower in both France and Germany and higher in the
United States and the United Kingdom. Nevertheless,
the money supply continued to increase much faster in
the first half of 1964 in France and Germany than in
the United States and the United Kingdom.
Page 5
Production and Money Expand Rapidly—
with neither Price Inflation nor Interest Rate Increases
A l t h o u g h o u t p u t h a s r i s e n rapidly in
1964, general price trends have not changed. While
credit demands have been strong, the general level
of interest rates has not risen.
Ch art 1
Wholesale Price Index
The economy has continued to expand, with pro
duction, employment, and spending moving strongly
upward. In September and October, however, there
was a pause in activity as a result of work stoppages
in the automobile industry. Although prices of se
lected industrial materials have risen since early this
year, general price levels have not moved differently
from the way they have in other recent years.
Interest rate stability is an unusual feature of the
recent financial scene; during other periods of eco
nomic advance, when capital formation trends were
strong, interest rates have generally risen. Monetary
expansion has been marked, especially since early
summer; the money supply has risen at a 5.8 per cent
annual rate since June. Total member bank reserves
have risen at a 6.3 per cent rate since May, after ris
ing more moderately from October to May (at a 4.3
per cent annual rate).
Some Prices Rise but General Trends
Are Unchanged
The rise in total demand for the economy's product
has not been accompanied by a change in general
price trends. Although increases have occurred in
prices of individual items and of some product groups
— reflecting increases in market demand — there have
been offsetting price declines in other areas. For ex
ample, prices of metal and metal products have risen
since early 1963, while prices of rubber and rubber
products have drifted lower (Chart 1).
Such offsetting price behavior is not unusual. In
deed, price increases in some product areas are the
means by which a market economy allocates limited
supplies and attracts resources to the creation of those
goods and services for which there is relatively strong
demand. Price increases have been most pronounced
in services, a field in which employment has also
risen rapidly. Price decreases tend to occur in areas
where there is weak product demand relative to sup
ply and in fields of most rapid technological gains.
Achievement of both price stability and a rising
standard of living requires that some of the fruits of
technological gains be passed on to the general public
in the form of price decreases — as has been the case
with many farm commodities — rather than be en
tirely retained through wage and profits increases
within the industries of most greatly increased effi
ciency. Such price decreases are necessary to offset
price increases which must occur in fields of slowly
advancing or stable technology if these groups are to
experience an improved standard of living and if
wage rates for similar labor are to be about the same
in different fields.
In recent months there have been increases in socalled sensitive prices. Although the general level of
wholesale prices has continued to fluctuate about the
level which was reached in early 1958, prices of se
lected industrial materials — including hides, steel
scrap, copper, zinc, and lead—have risen since the
fall of 1963. As Chart 2 shows, even though the
Wholesale Prices and Sensitive Prices
100
no
100
90
L at e s t d a t a p lo tt e d: S e p t e m b e r
S o u r c e : BLS
general level of wholesale prices has been unchanged
since 1958, prices of these sensitive industrial ma
terials have moved in response to changing cyclical
conditions.
Em ploym ent Rises
Payroll employment, apparently a relatively reliable
indicator of the state of the labor market, increased
at an annual rate of 2.1 per cent from August to Sep
tember, about the same as the average for recent
months. Total employment decreased slightly from
September to October and has shown a net decline
since April. However, it is believed that the total em
ployment data are relatively unreliable for indicating
short-term developments in the labor market.
During the past year and in other recent years,
employment increases in expanding areas of the
economy have been sufficient to offset employment
declines in agriculture and other areas of rapidly in
creasing technology or lagging final demand. In addi
tion, the rise in employment has been great enough
to accomodate those coming of working age and en
tering the labor force plus a substantial proportion of
those population groups which have increasingly
sought to participate in the labor force.1 This has been
true for the past ten months, for the current period of
expansion which began in early 1961, for the period
since the last peak in national economic activity, and,
indeed, for most of the postwar era.
Total employment has expanded at a 1.1 per cent
average annual rate since 1948. During this period
agricultural employment declined by 3.4 million
workers and other employment increased by 14.3 mil
lion (an annual rate of increase of 1.6 per cent). Es
timated payroll employment, which accounts for
about 90 per cent of estimated nonagricultural em
ployment,2 rose at a 1.7 per cent rate during this
period.
Employment increases since late 1948, since mid1960, and since early 1961 have been most rapid in
fields of relatively strong product demand (e.g., state
and local government) and in areas of relatively slow
technological change (e.g., services and construction).
Employment has declined or has grown only slightly
in fields of most rapid technological advance and/or
relatively weak product demand (Chart 3, page 8).
The continued expansion in the economy is re
flected in unemployment statistics. Unemployment
among married men has recently been about 2.8 per
cent compared with 3.2 per cent early this year (Chart
4, page 8). Recent rates are well below rates reached
in the 1958-60 expansion, but are somewhat higher
than in the 1955-57 expansion, a period marked by
some price inflation. The number unemployed 15
weeks or more has also declined thus far in 1964. In
October such long-term unemployment was 1.3 per
cent of the labor force; from mid-1962 to early 1964,
it was virtually unchanged near the 1.5 per cent level
(Chart 4).
Credit Demands Strengthen but Interest
Rates Remain Stable
Despite the rapid increase in economic activity in
1964 and the accompanying strengthening in credit
1 See "Recent Employment Trends” in the October issue of this
R eview .
2 Payroll employment data differ from nonagricultural employ
ment data in that the former are obtained from Department
of Labor surveys of nonagricultural establishments while the
latter stem from Bureau of the Census surveys of a sample of
households. In addition, there are differences in coverage: the
nonagricultural employment household survey data include
estimates of proprietors, the self-employed and unpaid workers
in family businesses, and domestic workers in households.
Page 7
Ch art 3
Changes in Selected Components of Employment
A n n u a l R a te s o f C h a n g e
from September 1948
to September 1964
from May 1960
to September 1964
from December 1963
to September 1964
from April 1961
to September 1964
TOTAL CIVILIAN
EMPLOYMENT
AGRICULTURAL
EMPLOYMENT
ALL OTHER
EMPLOYMENT
TOTAL PAYROLL
EMPLOYMENT
DURABLES
NONDURABLES
MINING
CONTRACT
CONSTRUCTION
TRANSPORTATION
& PUBLIC UTILITIES
WHOLESALE
& RETAIL TRADE
FINANCE, INSURANCE,
& REAL ESTATE
SERVICES & MISC.
FEDERAL GOV'T
STATE
& LOCAL G O V’T
-4
-2
0
2
4
Per C ent
demands, the general structure of interest rates has
remained stable. The pattern of stability has been in
evidence during much of the expansion beginning in
early 1961 and has been particularly marked since
late last year (Chart 5).
Yields on three-month Treasury bills have moved
within the 3.45 to 3.57 per cent range since October
1963. In November this year bill rates reached the
upper portion of this range. Treasury bill yields have
risen 1.15 percentage points since February 1961, the
Chart 4
Chart 5
U n e m p lo y m e n t R ate s
Y ield s on U.S. G overnm ent Securities
Per Cent
5.0 r
Per Cent
5.0
Monthly Av er a g es of Da ily Figures
4.5
4.5
Long-Term B<inds
-N.V N-*
4.0
3.5 —\
,
_A -.
1
—
4.0
3.5
3-5 Year Bonds
3.0
3.0
/ it
3-Month Treasury1 Bills
2.5
2.5
2.0
2.0
195 5 1956 1957 1958 1959 1960 1961 1962 1963 1964
^ U n e m p l o y e d a s a p e r c e n t of m a r r ie d men in the c i v i l i a n l a b o r fo r c e.
* * U n e m p l o y e d a s a p e r c e n t of the c i v i l i a n l a b o r fo r c e.
La t e s t d a t a p lo t t e d : O c t o b e r
S o u r c e : BLS
Page 8
qTT 11
i i i i i i i
7T1 1 1 1 1 1
La te st data plotted: October
M
11
iTi
11 M
111
i i IT 1 1 1 1 1 1 1 1 1 1 iT
q
trough of the 1960-61 recession. From trough to peak
in the 1958-60 and 1954-57 expansions, bill rates rose
2.16 and 2.24 percentage points, respectively. How
ever, short-term interest rates did not decline as much
in the 1960-61 period as in earlier postwar recessions.
Although the structure of interest rates has re
mained generally stable during the current expansion,
and especially in the last twelve months, there have
been significant departures from this pattern. Mort
gage rates are actually somewhat lower in Novem
ber this year than in early 1961, the trough of the
recent recession. Yields on highest and medium grade
corporate bonds have been about unchanged on
balance. On the other hand, yields on long-term U. S.
Government securities have risen somewhat during
the expansion, but the rise has been less than in
earlier periods of rising business activity.
With stable interest rates, increased credit demands
have resulted in a rapid expansion in the total quan
tity of credit outstanding. Bank credit has risen at an
8.3 per cent annual rate since September of last year
and at an 11.3 per cent rate since July. These rates of
increase are comparable with growth rates since 1961.
Money Supply Increases Rapidly
Monetary expansion has accelerated in recent
months. Since June, money has risen at a 5.8 per cent
annual rate; from October 1963 to June, money in
creased at a 3.3 per cent annual rate. The rate of
increase in the stock of money since the beginning of
the current economic expansion, at 3.3 per cent, is
substantially greater than during the two preceding
expansions. Money rose at 1.7 and 1.2 per cent annual
rates in the 1954-57 and 1958-60 expansions, re
spectively.
The recent relatively high rate of monetary ex
pansion was fostered by an increase in the rate of
growth of member bank reserves. From May to Octo
ber, total reserves rose at a 6.3 per cent annual rate
and, from August, at an 8.6 per cent rate. During the
seven months ending with May, bank reserves ex
panded at a 4.3 per cent annual rate. Reserves avail
able for private demand deposits have also risen
rapidly. Since May, they have risen at a 7.5 per cent
annual rate and, since August, at a 10.7 per cent
rate, while from October last year to May, these re
serves were virtually unchanged.
Employment and Population Trends
in the Central Mississippi Valley
E MPLOYMENT in the Central Mississippi Valley1
has expanded more rapidly than in the nation as a
whole since the 1957-59 period. These advances of
employment in recent years are in contrast with pre
vious trends (Table I).2 Based on the 1957-59 average,
U. S. payroll employment3 has risen at an average
annual rate of 2 per cent. For the same period, pay
roll employment in the five Central Mississippi Val
ley states combined has increased at a 2.2 per cenl
annual rate.4
Total Payroll Employment
1957-59=100
EMPLOYMENT
Annual Rates of Change
Total Employment
1940 to
1950
Arkansas
. . .0.6
Kentucky
,
1950 to
1960
1957-59 to
Summer 19641
1940 to
1950
|
1957
1958
Sou rce :
— 0.7
1.9
4.8
2.3
3.8
0.0
n.a.
3.9
1.7
2.0
3.0
2.3
4.6
3.0
0.5
0.5
3.7
1.4
1.1
.7,3
0.8
n.a.
5.4
2.2
2.9
Total 5 states . . .1.4
0.2
n.a.
4.3
1.9
2.2
United States . . .2.7
1.6
1.5
4.0
2.0
2.0
1 Data for summer 1964 are averages of June, July, and August seasonally adjusted figures.
n.a. N o t available.
Sources: U. S. Census of Population, U . S. Bureau of Labor Statistics, and State Employment Security
Offices.
1961
1962
1963
1964
The growth of nonfarm payroll employment in the
Central Mississippi Valley has occurred at about the
same rate in both the manufacturing and nonmanufac
turing sectors. This is in contrast with the national
pattern where the employment increase in manufac
turing has been slower than in nonmanufacturing
(Table II). Manufacturing
employment has risen at
an annual rate of 2.1 per
cent in the Valley compared
with 0.8 per cent for the
United States (Table III).
Nonmanufacturing
employ
Payroll Employment
ment has increased at a 2.3
1957-59
1950 to
per cent rate in the region
Summer 19
1960
and 2.6 per cent in the nation.
15
Page 10
1960
U n i t e d S t a t e s D e p a r t m e n t of L a b o r a n d
State E m plo ym en t Se cu rity Offi ce s
— 0.4
Tennessee . . .
1959
100
" A rk a n sa s, Ken tucky, Missouri , M iss is s ip p i, T en nesse e
L a t e s t d a t a p lo t t e d : A u g u s t
, , 0.1
Missouri
110
United States
100
. . . . . , .1.8
Mississippi
120
Central ^iississipp Valley*
\ ____^
110
1 Included in the discussion are Arkansas, Kentucky, Mississippi,
Missouri, and Tennessee. Each of these states is completely or
partly contained in the Eighth Federal Reserve District. Parts
of Illinois and Indiana are also included in the Eighth District,
but these states are not analyzed here. For purposes of this
article, “Central Mississippi Valley” will refer to the five abovementioned states.
2 For an analysis of state employment trends during the 1940-60
period, see “The Geographical Redistribution of Employment:
An Examination of the Elements of Change,” Survey of Cur
rent Business, October 1964.
3 Total nonfarm payroll employment is used as the fundamental
measure of employment because of its general availability.
Tennessee and Kentucky do not make available total employ
ment estimates on a regular monthly basis.
Table I
1957-59 = 100
------- 1---------
S e a s o n a l ly A d juste d
120r
4 The statistical data and compari
sons used in this article are be
lieved to be valid for the pur
poses intended. However, the
following considerations should
be noted. 1) There is no assur
ance that trends of the past six
years will be continued. 2) A
base other than 1957-59 would
give somewhat different results.
3) State and local employment
statistics may not be precisely
comparable with each other or
with national figures.
Table II
EMPLOYEES ON NONFARM PAYROLLS, BY INDUSTRY, SUMMER 19641
Arkansas
Kentucky
Mississippi
Missouri
Tennessee
Total Five States
United States
Thousands
Thousands
Thousands
Thousands
Thousands
Thousands
Thousands
of
1957-59
of
1957-59
of
1957-59
of
1957-59
of
1957-59
of
1957-59
of
1957-59
Persons = 100 Persons = 100 Persons = 1 0 0 Persons = 100
Persons = 100 Persons = 1 0 0 Persons = 100
Manufacturing
....
122.9
133.2
189.8
113.5
139.6
62.5
60.4
131.0
135.4
97.1
92.7
117.4
109.6
63.1
76.6
307.4
120.7
526.3
112.0
311.1
5.0
30.4
78.1
165.2
29.0
42.6
79.9
123.5
6.4
29.2
92.0
17.0
77.2
56.6
102.5
118.6
139.3
112.4
132.6
54.6
147.5
28.6
124.1
99.8
.......................... 4 30 .3
124.1
716.1
Durables ..................
Nondurables .........
Nonmanufacturing
Mining ....................
Construction ...........
Trans, and
public util.............
Trade ......................
Fin., ins., real estate
Government ...........
Services, misc...........
Total
4 06.0
104.8
357.4
208.8
197.2
109.5
100.3
132.4
225.0
115.8 1,009.4
123.3
123.7
123.2
120.0 1 ,215.7
120.4
119.8
563.9
651.9
117.8 2 ,8 4 0 .4
114.9 17,428
105.0
9,910
7,518
106.0
103.8
113.3 41,7 2 7
116.0
117.0
113.2
108.4
686.2
27.9
108.5
129.8
7.8
78.1
90.7
121.8
6.8
62.8
84.0
146.0
55.0
241.8
84.2
133.2
647
3,468
84.0
120.1
98.0
108.5
127.7
114.6
129.8
25.7
88.5
16.0
94.3
52.4
99.6
109.7
133.3
115.1
128.1
115.0
314.2
78.5
212.7
203.2
92.7
102.2
116.3
114.9
116.8
56.9
206.3
45.8
165.9
141.6
99.5
107.6
129.4
118.5
132.1
281.4
848.5
185.9
674.2
553.6
96.6
106.9
124.3
115.4
125.3
4,021
12,267
2,981
9,575
8,769
98.7
112.3
117.8
121.2
127.2
112.4
4 5 0 .7
113.8 59,155
112.5
118.0 1,415.4
107.4 1,043.6
118.5 4,056.1
1 D ata for summer 1964 are averages of June, July, and August figures.
Sources: U . S. Bureau of Labor Statistics and State Employment Security Offices.
Table III
POPULATION AND EMPLOYMENT
Annual Rates of Change from 1957-59 to Summer 19641
Population
Total
Employment
Total
Payroll
Employment
Manufacturing
Employment
Nonmanufacturing
Employment
States
..........................................1.9
1.9
3.8
5.2
Kentucky ............................................1.1
Arkansas
n.a.
2.0
2.4
1.8
Mississippi
....................................... 1.7
2.3
3.0
3.7
2.8
Missouri
3.3
............................................0.8
0.5
1.1
0.7
1.3
Tennessee ..........................................1.6
n.a.
2.9
3.1
2.8
Total 5 states ................................... 1.3
n.a.
2.2
2.1
2.3
St. Louis ............................................n.a.
0.3
0.6
— 0.4
1.2
Louisville
..........................................n.a.
0.6
0.9
0.3
1.3
Memphis ............................................n.a.
1.6
2.0
1.6
2.1
Metropolitan Areas2
Little Rock ....................................... n.a.
2.4
3.6
4.6
3.3
..........................................n.a.
— 0.3
0.1
— 1.1
1.0
Springfield, Mo................................. n.a.
2.5
2.6
5.4
1.6
Fort Smith ....................................... n.a.
2.2
5.0
6.7
4.1
Evansville
United States ....................................... 1.7
1.5
2.0
0.8
2.6
1 Employment data for summer 1964 are averages of June, July, and August seasonally adjusted figures.
2 In Eighth Federal Reserve District,
n.a. N ot available.
Sources: U . S. Bureau of the Census, Current Population R eports; U. S. Bureau of Labor Statistics; and State
Employment Security Offices.
Page 11
The recent expansion of employment in the Central
Mississippi Valley has been associated with a signifi
cant shift in population trends in most of the states
(Table IV ). Population in the five states increased at
a 1.1 per cent annual rate during the 1960-63 period
compared with a 0.4 per cent rate in the preceding
decade. A shifting pattern of migration trends has
been responsible for the recent increase in the rate of
growth of population. These changing population
trends are probably closely related to the strong em
ployment conditions in the area in recent years.
Expanding employment opportunities in Arkansas
have been accompanied by substantial net in-migration (excess of persons entering state over those leav
ing) in recent years (Table IV). It is estimated that
from 1960 to 1963 the net in-migration rate has been
0.6 per cent per year, which compares with a net out
migration annual rate of 2.3 per cent in the 1950’s.
The natural increase via births and deaths has fallen
somewhat since the 1950’s and has been at about the
same rate as in the United States.
Each of the five states has shared in the employment
increases during the 1957-64 period, but in varying de
grees. Since 1957-59, payroll employment has risen at
an annual rate of 3.8 per cent in Arkansas, 2 per cent
in Kentucky, 3 per cent in Mississippi, 1.1 per cent in
Missouri, 2.9 per cent in Tennessee, and 2.2 per cent
in the five states combined. These figures indicate that
the southern portion of the Central Mississippi Valley
has registered the strongest gains in employment
(Table III).
State-wide employment trends have also been in
evidence in the metropolitan areas of the state.5 Since
1957-59, both total employment and nonfarm payroll
employment in Little Rock and Fort Smith, as in the
state, have risen significantly faster than in the nation
(Table III). Little Rock employment has expanded
at an annual rate of 2.4 per cent since 1957-59 com
pared with a 1.9 per cent rate for the state and 1.5 per
cent for the United States. Manufacturing employ
ment increases in Little Rock have been especially
strong.
Arkansas
Total employment in Arkansas has expanded at a
1.9 per cent annual rate since 1957-59 compared with
a 1.5 per cent rate nationally (Table III). Payroll em
ployment has increased at a 3.8 per cent rate compared
with a U. S. rate of 2 per cent. Employment increases
have been strongest in manufacturing, but nonmanu
facturing employment has also risen faster than in the
nation. Within each of these categories, industry in
creases have been widespread (Table II). Manufac
turing gains have been at about the same rate for dur
ables and for nondurables. Nonmanufacturing employ
ment has advanced most rapidly in the construction,
finance, and service industries.
Fort Smith employment has advanced significantly
since 1957-59, with almost all the increase occurring in
1962. Subsequently, employment has remained on a
high plateau.
Kentucky
Payroll employment in Kentucky has increased since
1957-59 at an annual rate of 2 per cent, the same rate
as for the United States (Table III). Expansion rates
in manufacturing and nonmanufacturing have been
2.4 and 1.8 per cent, respectively. Finance and services
employment have both risen
at about a 5 per cent annual
Table IV
rate.
POPULATION, 1950-60 AND 1960-63
Annual Rates of Change
Notural Increase1
Net Migration2
Total Net Change3
1950-60
1960-63
1950-60
........................... ...........................1.7
1.3
— 2.3
0.6
— 0.7
1.9
Kentucky ............................. .......................... 1.6
1.3
— 1.3
— 0.5
0.3
0.9
........................ ...........................2.0
1.7
1.1
— 2.0
— 0.2
0.0
1.5
— 0.3
— 0.6
0.9
0.5
Tennessee .......................... .......................... 1.6
Total 5 states .................. .......................... 1.6
1.3
— 0.8
0.2
0.8
1.5
1.3
— 1.1
— 0.2
0.4
1.1
Illinois ............................... ...........................1.3
Indiana ............................... .......................... 1.5
1.3
0.1
— 0.4
1.5
0.9
1.4
0.2
— 0.6
1.7
0.8
United States .................... ...........................1.5
1.4
0.2
0.2
1.7
1.6
1950-60
Arkansas
Mississippi
Missouri
............................. .......................... 1.2
1960-63
1 Births minus deaths.
2 Persons entering state minus persons leaving state.
3 Figures may not balance because of rounding.
Source: U. S. Bureau of the Census, Current Population Reports, Series P -25, N os. 247, 2 89.
Page 12
1960-63
Along with its comparative
ly rapid increase of payroll
employment, Kentucky’s pop
ulation growth rate has re
cently increased, although it
apparently has remained be
low the U. S. rate (Table IV).
The increase has been ac
counted for by a sharp de
cline in the rate of net out5 Monthly data and charts for met
ropolitan areas in the Central
Mississippi Valley may be ob
tained upon request to the Re
search Department of this bank.
migration. During 1960-63, net movement out of Ken
tucky was at a rate of 0.5 per cent per year compared
with a 1.3 per cent rate during the 1950’s.
Total Payroll Employment
In the Louisville metropolitan area, employment has
lagged behind the rest of the state, particularly in the
manufacturing sector. Total employment has increased
at an annual rate of 0.6 per cent since 1957-59, with
virtually all of the gains registered in the last two
years. Manufacturing employment has just recently
attained levels which prevailed in 1957-59.
Mississippi
Total employment has expanded more rapidly in
Mississippi than in the nation since 1957-59, at an
annual rate of 2.3 per cent (Table III). Payroll em
ployment has increased at a 3 per cent rate. Contrib
uting to the increase has been the advance of manu
facturing employment at a 3.7 per cent annual rate.
Nonmanufacturing concerns have increased their em
ployment at an annual rate of 2.8 per cent since 195759, with construction, finance, and services the indus
try leaders.
Population increase in Mississippi has not been quite
so rapid as the growth of employment. The net out
migration rate of 0.2 per cent during 1960-63, how
ever, represents a substantial decline from the 2 per
cent rate prevailing during the 1950 s.
Missouri
Since 1957-59, both total employment and nonfarm
payroll employment in metropolitan St. Louis and in
Missouri as a whole have grown at a slower rate than
in the United States (Table III). In Springfield, Mis
souri, the rate of growth has been more rapid than for
either the state or the nation.
Manufacturing employment in Missouri has in
creased at a lesser rate than in the other four states
but at about the same rate as for the United States.
Nonmanufacturing payroll employment has increased
at a substantially lower rate for Missouri than for the
nation.
The relatively slow growth of employment in Mis
souri has been reflected in a recent acceleration of the
net out-migration rate (Table IV). From 1950 to 1960,
the average annual rate of net out-migration was 0.3
per cent; during 1960-63, it was 0.6 per cent.
Payroll employment in the St. Louis metropolitan
Latest data plotted: August
Source: State Employment Security Offices
area since 1957-59 has increased at a rate about half
that for Missouri. Nonmanufacturing employment in
St. Louis has risen steadily and slowly, while manufac
turing employment has yet to attain its 1957-59 level.
Tennessee
Tennessee payroll employment has grown at a 2.9
per cent annual rate since 1957-59 (Table III). Gains
have been greatest in manufacturing, but nonmanufac
turing employment has also increased faster than in
the nation. Construction, finance, and services have
all shown large employment gains since 1957-59.
The rise of employment has been accompanied by
a sharp reversal of migration trends. From 1950 to
1960, the annual rate of net out-migration was 0.8 per
cent, but, since 1960, there has been a net in-migration
rate of 0.2 per cent.
Page 13
The Memphis metropolitan area has shared in the
state-wide employment gains. Since 1957-59, manu
facturing employment has risen at an annual rate of
1.6 per cent, and the number of nonmanufacturing
employees has increased at a 2.1 per cent rate (Table
III).
Conclusion
In sharp contrast with immediately preceding
trends,0 employment growth in the Central Missis
sippi Valley during the past six years has been more
rapid than in the nation. Growth has been especially
marked in the southern part of the area, and, for the
region as a whole, has been most rapid outside the
major metropolitan areas.
Arkansas and Mississippi have shifted from a nega
tive trend of total employment in the 1950-60 decade
to a positive trend markedly above that for the United
States as a whole (Table I). In Mississippi and Ten
nessee the rate of increase in payroll employment since
1957-59 has been one and one-half times as great as in
the nation, and in Arkansas it has been twice as great.
Employment growth has been less rapid in the
major metropolitan areas than in other parts of the
Central Mississippi Valley (Table III). The rate of
increase of total employment in the St. Louis metro6 These trends are summarized in the Survey of Current Busi
ness, October 1964.
politan area has been less than in all of Missouri. The
rate of increase in Memphis has been less than in near
by Mississippi. The rate of increase of payroll employ
ment has been less in St. Louis than in Missouri, less
in Louisville than in Kentucky, less in Memphis than
in Tennessee or in Mississippi. The exception has been
in Little Rock, where the rate of growth in total em
ployment has been greater than in the state, and the
growth in payroll employment has been about the
same as in the state.
The employment experience of the Central Missis
sippi Valley in recent years suggests a new upward
trend in economic growth. In the current jargon of
economic historians and development economists, it
appears that the least industrialized parts of the Cen
tral Mississippi Valley may have reached, some time
in the late 1950’s, a point of “take-off into sustained
growth.” The rapid growth of the relatively nonindus
trialized states, Arkansas and Mississippi, lends sup
port to the “take-off” hypothesis. The contrasting
growth rates of “mature” metropolitan areas and non
metropolitan parts of states are a further consistent
aspect.
Whether the recent, relatively rapid growth in the
Central Mississippi Valley, and especially in nonmetro
politan sections, is actually a “take-off into sustained
growth” or is a temporary flurry of increased activity
remains to be seen.
ECONOMIC INDICATORS
St. Louis Metropolitan Area
Louisville Metropolitan Area
Production and Spending
Production and Spending
Seasonally Adjusted
* Five-month moving averages (except for latest two months, which
are averages of four months and three months).
** Three-month moving averages (except latest month, which is a
two-month average).
t Five-month moving averages (except for latest two months, which
are averages of four months and three months).
r Three-month moving averages (except latest month, which is a
two-month average).
Banking Activity
Banking Activity
Seasonally Adjusted
1957-59= 100
150
Seasonally Adjusted
1957-59= 10 0
150
Business Loans*
140
1957-59=100
October 150
Business Loans*
140
140
140
130
130
130
120
120
120
110
110
October
130
120
110
100
1957-59=100
1 50r
-1 1 1 I 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1
,1 1 1 1 1 1 1 1 1 1 1
100
100
110
1 1 1 1 1
1 1 1
1 1
t
Bank Deposits*
130
1
1 1
1 1
1 1
1
1 1
1
1
1 1
1 1 1 1
1
1
1 1
100
Bank Deposits*
130
140
120
130
130
110
110
120
120
100
100
110
110
90
100
October
120
90
.1
1 1 1 1 1 1 1 I
1 1
1962
* Weekly reporting banks.
i
i
1 i
i
!
i
1963
,j
I
i
i
1 I 1 1 1 1 1 1 1 1 1
1964
October
L 1 1...1 1 1 t 1 1 t 1
11111111111
1962
1963
140
i i i i i 1 i i ! i i 100
1964
* Weekly reporting banks.
CHARTS AND TABLES of economic data for each of seven metropolitan areas in the Central Mississippi Valley
are available monthly in a report of this bank entitled SELECTED ECONOMIC INDICATORS. Direct request to:
Research Dept., Federal Reserve Bank of St. Louis, P. O. Box 442, St. Louis, Missouri 63166.
Page 15
S
ubscriptio ns to t h is b a n k ’s
R EV IEW are available to the public without charge, including bulk mailings to
banks, business organizations, educational
institutions, and others. For information
w rite: Research D ep a rtm en t, F ed era l
Reserve Bank of St. Louis, P. O. Box 442,
St. Louis, Missouri 63166.
@FedFRASER