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October 1956

Volume X X X V III

Number 10

Structure of Banking in the Eighth District:
Chains, Qroups and Interindustry Competition
HE PRESENT ARTICLE continues an analysis of banking structure
begun earlier.
At the end of 1954 controlled banks in groups contained about 6 per cent
of the banking offices of the country and 8 per cent of the deposits, but in
the Eighth District group banking has not involved as large a portion of
banking resources as it has nationally. Neither have bank chains presented
a structural problem in the Eighth District.
Typically, district towns and cities contain few banks, but competition among
banks in different localities has been increasing. Of greater significance,
commercial banks encounter vigorous competition from other financial in­
stitutions for loans, particularly in the fields of mortgage and consumer
credit, and for time deposits.
In summary, in the Eighth Federal Reserve District there has been little
increase in bank concentration, and banks have recently been faced with
more intense interindustry rivalry.

V

F ed eral

ftesjejpV* B a n k
A

ofjSt. Lo u is

The Structure of Banking in the Eighth District:
Chains, Qroups and Interindustry Competition

The present article continues an analysis of
banking structure begun earlier.

J n an earlier issue of the Monthly Review banking
structure in the Eighth Federal Reserve District was
examined largely in terms of branches and mergers.
It is the purpose of the present article to push the
analysis of structure somewhat further. The earlier
inquiry led to the conclusion that in the Eighth Dis­
trict such branch formations and combinations as have
occurred over the past decade have had litde influence
on district banking structure as measured by number
of institutions involved or shares of total resources
controlled by large banks in particular areas. This
study examines group banking and chain banking to
see whether these forms have been substituted for
branch systems or whether they have taken the place
of mergers, consolidations, and absorptions. It also
analyzes changes in the relative importance of com­
peting institutions, particularly savings intermediaries,
to see if interindustry rivalry has influenced district
banking structure.
At the end of 1954 controlled banks in groups
contained about 6 per cent of the banking
offices of the country and 8 per cent
of the deposits, . . .
A “group” of banks consists of two or more banks
under the control of a holding company which itself
may or may not be a bank. A group of banks may
operate in several states, though some large groups
are intrastate and are substitutes for branch systems
in states which prohibit branch banking. As meas­
Page 114




ured by the amount of banking resources controlled
a group may be large or small, and the question of
what constitutes effective "control” is a difficult one.1
But the essence of the group relationship is that die
corporate device be used to acquire control of banks
either by direct purchase of stock (funds coming
from the sale of company stock to the public) or by
exchanging the stock of the company for that of
individual banks.
At the end of 1954, 18 groups in the country were
subject to limited regulation under Federal law, and
a somewhat smaller number of groups not subject to
Federal regulation were considered of comparable
importance. However, if all the known cases were
included in which corporations, business trusts, or
associations owned or controlled 25 per cent of the
stock of one or more banks, member or nonmember,
there were 163 groups in 41 states, Alaska, and the
District of Columbia at the end of 1954. In these
groups were 1,440 banking offices with deposits of
nearly $26 billion; the ratio of banking offices in the
163 groups to all commercial banks in the United
States was 7.21 and the percentage of deposits was
i The Bank Holding Company Act of 1956 defines a "bank holding com­
pany” as "any company—
(1) which directly or indirectly owns, controls, or holds with power to
vote either
(i) 25 per centum or more of the voting shares of each of two or
more banks, or
(ii) 25 per centum or more of the voting shares of any other com­
pany which is or becomes a bank holding company; or
(2) which controls in any manner the election of a majority of the direc­
tors of each of two or more banks; or
(3) for the benefit of whose shareholders or members 25 per centum or
more of the voting shares of each of two or more banks or of a bank holding
company is held by trustees; or
(4) which is a successor to any company that falls within (1). (2) or
(3) above, aad any such successor shall be deemed to be a bank boldine
company from the date as of which its predecessor company became a bank
holding company/*

K irksville-3
•Qurncy
Hannibal

\

•Columbia-3
•Sedalia-3

ST. LOUIS -9 9
•Waterloo-3

•
New A lb an y-4 ^ Q y | S V ^ _ L E * * 2 I

Carmi -3

m

|

EVAN S V IL L I
@

Metropolis *3

•
•Paducah-3

W Shelbyvib-4

"

Owensboro - 3 •

Perryvi lie -3 •
•Salem -3

Lebanon-3

„

/■‘s i 1
-3,
♦Washington-4 JF

®

| •Clinton-3

.

Bedford - %

Litchfield-3

Springfield * 3 •
Lebanon-3

_

..

_

.

Bowling Green - 4
•

•Mayfield *3

•

FORT SMITH-6

•

®M EM PHIS-9
©

»

Jackson-3

Covington-3

LIT T LE RO CK-8

® Metropolitan Areas

Trenton-3

Paragould - 3
Jonesboro-4 *

Holly Sprtngs-3

3,4, etc. shows number
of banks in areo

mm
&J
m

|

Helena-3 •
*
Tupelo - 3 *

•Arkadelphia -3
Columbus -3
•Greenwood-3
§reenvil le*3
*El Dorado- 3

14.02. If from these data were excluded 50 banks
which exerted control, the banks controlled num­
bered 1,156 banking offices with deposits of $14
billion, and the ratios of banking offices and deposits
to the United States total were 5.79 and 7.75
respectively.2

Groups vary greatly in importance from region to
region in the United States. In the Eighth Federal
Reserve District not much development of this form
of multi-unit banking has taken place. As measured
by the total of banking resources involved, there is
no particular indication of a marked amount of con­
centration in district group banking.
2
See "C o n tr o l o f Bank H o ld in g C om panies,” Senate H earings, 84th C o n ­
gress, First Session, on S .880, S .2350, and H .R .62 27, pp. 51-52, 60.




Records indicate that there are only seven cases in
the district which involve corporate control of a mem­
ber bank. In three cases one bank effectively con­
trols another through stock ownership, but the re­
lationship in each case is akin to that of parent bank
and branch. In three other cases a nonbank corpo­
ration controls only one bank. A true group exists
only in the case of a nonbank corporation which holds
20 per cent or more of the voting shares of six banks.
Total resources involved amount to $995 million of a
total of nearly $7 billion of member bank resources
in the Eighth District as of December 1, 1955. When,
however, the resources of three controlling banks
(two of them quite large) are excluded from the fig­
ures, the remaining banking resources of $111 million
are small relative to district totals.
Data for groups involving only nonmember banks
are not available in customary published sources. So
far as can be determined, one large group involving
Page 115

only nonmember banks does business in the Eighth
District. According to an unofficial source, this group,
controlled by a bank holding company, consists of
eight banks operating in three states, with resources
in excess of $256 million.
Neither have bank chains presented a structural
problem tn the Eighth District.

Bank chains, under which a number of individual
ly incorporated banks are controlled by the sam<
individual or group of individuals, may, of course
achieve results similar to those of a group. Througl
stock ownership by individuals or through commoi
directors it is possible for several banks to be broughl
under single control as effectively as though a cor­
poration controlled them. However, the expansion oi
chains is limited by the financial means of an in­
dividual or a small group of individuals, and control
usually ceases upon the death of individuals or is
diffused among heirs.3
Recent data are not presently available on eithei
the number of bank chains operating in the United
States or the total amount of resources involved. In
the Eighth Federal Reserve District there are twelve
chains which involve at least one member bank each,
and the amount of banking resources included in the
twelve chains totals nearly $158 million. Nine of the
chains are two-bank chains, one is a three-bank chain,
and two are four-bank chains. In addition, there
may be instances in which control of an Eighth Dis­
trict member bank is held by individuals with majoi
banking interests outside the district.
There are probably a few bank chains involving
only nonmember banks for which data are not avail­
able, but these chains are small. In at least one in­
stance two nonmember banks in the Eighth Federal
Reserve District are known to be units in a large
chain operating chiefly outside the district. In gen­
eral, however, chain banking in the Eighth District
does not involve a large proportion of total resources.
Typically, district towns and cities contain
few banks, . . .

It seems clear, then, that no marked structura
change has occurred in Eighth District banking as £
consequence of growth in multiple-unit banking. Ir
brief, district bank structure has remained in th<
3 See ''Bank Holding Legislation," Senate Hearings, 83rd Congress, Firs
Session, on S.76 and S.1118, p. 35.

Page 116




tradition of commercial banking in the United States.
The number and distribution of district banks, most
of them under unit operation, are shown in Tables
1 and 2.
Most of the cities in the Eighth District having
banks are either one-bank or two-bank cities. Seventyseven per cent of the cities having banks have only
one, and another 18.5 per cent have only two. Put
another way, 58 per cent of Eighth District banks
are in one-bank cities, and 86 per cent of the banks
are in one-bank or two-bank cities.
Table 2 arranges number of banks by population
of the place where banks are located. More than
half the banks of the districts are located in cities of
2,500 or less, and in towns in the smallest category
one bank, for understandable reasons, is typical. Two
banks are typical in towns of 2,500-9,999 population,
though a large proportion of cities in this category
have only one bank. In cities of 10,000-24,999 two
banks are again the typical number, but a high pro­
portion have three banks. All cities having five banks
or more are in the over-25,000 population category.
Quincy, Illinois, and Springfield, Missouri, each have
five banks, Evansville and Little Rock each have six,
Memphis has seven, Louisville nine, and St. Louis
twenty-seven.
, . but competition among banks in different
localities has been increasing.

A strict counting of the number of banks within
city limits does not, of course, indicate the degree of
competition which those banks face. For one thing,
modern transportation and communication facilities

TABLE I
HUMBER AND DISTRIBUTION OF BANKS IN THE EIGHTH
FEDERAL RESERVE DISTRICT
SEPTEMBER 1956
Cities with
banks,
by classes
of city

Number of
cities in
each class

Number
of banks
in cities of
each class

853
205
38
6
2
2
1

853
410
114
24
10
12
7

One-bank cities. . .
Two-bank cities... .
Three-bank cities.
Four-bank cities..
Five-bank cities. ..
Six-bank cities. . . .
Seven-bank cities.
Eight-bank cities. .
Nine-bank cities..
Ten-bank cities. ..
Cities with more
than ten banks. .
Totals.........

Percentage Percentage
of total
of total
cities in banks in Citie:
each class of each class
76.9
18.5
3.4
0.5
0.2
0.2
0.1

___

___

___

1

9

0.1

___

___

___

58.2
28.0
7.8
1.6
0.7
0.8
0.5

___

0.6

___

1

27

0.1

1.8

1,109

1,466

100.0

100.0

have brought the services of more than one commer­
cial bank within reach of potential customers who,
because of physical barriers of space, formerly had
access to only a single institution. This fact is readily
observable in the larger centers if the place of loca­
tion is considered not a city but a standard metro­
politan area. Moreover, a total of 207 branches, not
included in the count of Tables 1 and 2, add to bank
competition in many places, particularly in certain
metropolitan areas of the district.4
Of greater significance, commercial banks encounter
vigorous competition from other financial
institutions . .«
Although, as demonstrated in this and a previous
article, multiple-unit banking and mergers have not
influenced district banking structure, the fact remains
that commercial banks are ordinarily few in number
relative to the area which they serve. The question
then arises whether commercial banks are in close
competition with other financial institutions. In one
respect, of course, commercial banks are unique
among financial institutions. They alone hold on their
books much the greater part of the country's money
supply and participate exclusively in the transfer of
funds by check; and they alone create liabilities
against themselves in the form of money so that they
are the only financial institutions aside from the cen­
tral bank which participate in the money-creating
process. But, as both lenders of funds 'and as savings
TABLE II
NUMBER OF BANKS BY POPULATION OF CITY OR TOWN WHERE
LOCATED, EIGHTH FEDERAL RESERVE DISTRICT, 1956

Number of places with banks, by population
Less than
2,500
1
2
3
4
5
6
7
9
27

Bank
.
Banks. . .
Banks. . .
Banks. . .
Banks. .
Banks. . .
Banks. . .
Banks. . .
Banks. . . .

751
58
3

2,5009,999

10,00024,999

94
115
16
1

6
27
12
3

_
_
—

_
_
....
—

Total
number of
places
with banks

25,000
and over
2*
5
7
2
2
2
1
1
1

853
205
38
6
2
2
1
1
1

Total number
of places
having banks. .

812

226

43

23

1,109

Total number
of banks

876

376

108

106

1,466

Population figures are from the 1950 Census.
* These two cities are University City, Missouri, and North Little Rock,
Arkansas, which lie within standard metropolitan areas. The number of
banks in the largest metropolitan areas of the district is as follows:
Evansville, 10; Little Rock, 8; Memphis, 9; Louisville, 21; and
St. Louis, 99.
4 See the discussion of branch systems in the Monthly Review, Federal Re­
serve Bank of St. Louis, April, 1956.




intermediaries, commercial banks find themselves in
keen competition with other institutions.
,. for loans, particularly in the fields of
mortgage and cmisnmm credit f . * .
The changing structure of commercial bank assets
and the relative importance of different types of loans
has been examined elsewhere.5 Briefly, after World
War I loans of commercial banks declined relative to
investments until the end of W orld War II, but in the
postwar period they have risen sharply. Until the
onset of the Great Depression, however, the decline
of loans relative to total assets was not pronounced,
and the character of lending was largely as it had
always been for commercial banks—
namely, short­
term loans to business and agriculture.
However, with the sharp decline in demand for
short-term commercial loans which accompanied the
economic stagnation of the 1930's bankers were com­
pelled to seek new types of earning assets. In part,
they followed a course of least resistance by buying
substantial amounts of Government securities, then
being created as a result of current Treasury deficits.
The more enterprising, encouraged by the success of
a few pioneers of the 1920's, began to make loans for
the purchase of consumer goods, and their lead was
quickly followed as the experience with this type of
loan, even in depression years, proved favorable. At
the same time, doubtless heartened by the Federally'
underwritten mortgage, commercial banks began to
make a significant number of amortized, long-term
loans on urban residences. And as recovery set in,
more and more banks came to make term loans to
business ranging in maturities from one to five years
and even longer, repayable on an instalment basis.
By the end of the 1930's loans in these three categories
constituted perhaps one-half of the loan portfolios of
member banks, and loans of this type were to remain
an important part of bank lending into the present.
Thus, in the decade or so preceding World War II
commercial banks pressed into new fields of lending
activity, becoming serious competitors of sales finance
companies, savings and loan associations, mutual sav­
ings banks, and life insurance companies. During
W orld War II loans to consumers fell off as a pro­
portion of the total, and urban real estate loans main­
tained nearly a constant proportion.
In the postwar decade institutions which had felt
the competition of banks made vigorous efforts to
recapture their share of the rapidly expanding market
5 See, for example, "Commercial Banking in a Dynamic Economy,” Busi­
ness Review, Federal Reserve Bank of Philadelphia, June, 1956, pp. 2-11 and
"Economic Expansion: How Will Commercial Banks Participate?” Monthly
Review, Federal Reserve Bank of Kansas City, September, 1956, pp. 3-10.

Page 117

*

Per Cent

100

PERCENTAGE DISTRIBUTION OF 4-FAMILY NONFARM MORTGAGE CREDIT
BY MAJOR HOLDERS

0
1940

Source:

1943

1946

Federal Reserve Bulletin.

for consumer and real estate loans. It is true that
bank loans expanded $55 billion or 217 per cent in
the ten years ending December 31, 1955, mortgage
loans meantime increasing 340 per cent and loans to
consumers 800 per cent.0 But though these gains
were considerable, competing financial institutions
managed to hold or increase their shares of these
types of loans. Commercial bank holdings of resi­
dential mortgage loans were about 18 per cent of
urban mortgage credit at the end of 1945; but after
rising to more than 25 per cent of the total and hover­
ing just below that mark in the late forties, the figure
gradually declined to 18 per cent again. Some banks,
of course, have simply preferred other types of lend­
ing, and some have reached statutory upper limits
on real estate mortgage loans. In part, however, the
reduction in the portion of such loans held by banks
must be attributed to the vigorous competition of
savings and loan associations, mutual savings banks,
and life insurance companies.
At the end of 1945 commercial banks held 30 per
cent of instalment paper outstanding and increased
this proportion to about 40 per cent in the early
1950’s. During the past two years, however, sales
finance companies have increased their share of the
market by a few percentage points, largely at the
expense of bank holdings, with the result that banks
held 37 per cent of this type of paper and sales
finance companies 32 per cent at the end of 1955.7

f

6 Term loans of member banks a little more than doubled in about the same
>eriod to $10.4 billion but simply maintained a steady proportion of business
oans.

7 Sales finance companies have recently improved their position largely be­
cause of the great increase in automobile financing in recent years. It should
be remembered, too, that banks lend to sales finance companies through their
commercial loan departments and thus help to finance their competitors in the
consumer credit field.

Page 118



During the past decade member banks in the
Eighth Federal Reserve District showed a smaller
percentage gain in total loans (188 per cent) than
did all commercial banks in the country. They like­
wise experienced somewhat smaller, though still sub­
stantial, gains in mortgage loans and consumer loans,
the figures being 283 per cent and 520 per cent, re­
spectively. But during this period mortgage loans
increased from 17 per cent to 24 per cent of total
loans and consumer loans increased from 12 per cent
to 23 per cent of total loans, changes which indicate
strong efforts on the part of Eighth District banks to
secure this kind of business. During the same period,
however, term loans, while growing in volume, were
about the same proportion of business loans that they
had been a decade earlier.
P e rc e n t

100

PERCENTAGE DISTRIBUTION OF CONSUMER
INSTALMENT CREDIT BY MAJOR HOLDERS

80

60

40

20

0
'9 3 9

Source:

1943

Federal Reserve Bulletin.

1947

1951

1955

. . . and for time deposits.
Commercial bankers are today perhaps more keenly
aware of interindustry competition in securing time
deposits than in obtaining loan business. The basic
reason for this awareness is not hard to find. Dur­
ing the first three decades of the twentieth century
time deposits increased much more rapidly relative

to the growth of the national income than they have
during the past 25 years. Within the past two decades
savers have been effectively persuaded to select from
a wide choice of financial claims, including savings
bonds, deposits in commercial banks and mutual sav­
ings banks, cash values in life insurance policies, and
shares in savings and loan associations (see chart).

SAVINGS IN SELECTED TYPES OF MEDIA IN THE UNITED STATES
(In billions of dollars, at year-end)

SCALE FDR COMPONENTS
BILLION DOLLARS

Sources::
Note:

SCALE FOR TOTAL
BILLION DOLLARS

Federal Reserve Bulletin and Savings and Loan Fact Book.

On this semi-logarithmic chart, comparison of the slopes of
lines gives a comparison of rates of change.




Page 119

In the years just preceding World War II as well as
during the war, holdings of savings bonds grew at an
extremely rapid rate as the Treasury asked citizens
to aid in financing the military effort and to assist in
abating inflationary pressures. During the postwar
decade the other savings intermediaries have shown
a rather remarkable growth, but the rate of increase
of shares in savings and loan associations has been
greater than those of other savings institutions by a
considerable margin.
Reasons for the spectacular recent performance of
savings and loan associations can only be surmised.
Favorable interest differentials, the convenience of
saving for downpayment equities at institutions
specializing in residence financing, and aggressive ad­
vertising campaigns have been strong positive in­
fluences. Whatever the reasons for savings and loan
association growth, many commercial banks have
felt the competition in terms of a diminished rate of
increase of time deposits.

£0M ?£fH K »N OF RATES O F OIOWTH OF TIME DEPOSITS

IN tNSiJ#£D COMMggCiM EANtCS AND SAVINGS
CAPITAL OF SAVINGS AND LOAN. ASSOCIATIONS,
.EIGHTH DiSTHICT STATES. 1$35 195$

MILLION D OLLARS

Sources: Federal Deposit Insurance Corporation and U. S. Savings and
Loan League.
Note:

Shares in savings and loan associations in district states are
in part estimated. On this semi-logarithmic chart, comparison
of the slopes of lines gives a comparison of rates of change.

Page 120




The resource growth of the commercial banking
system is not, however, necessarily retarded by com^
petition of this nature. Money left in a savings and
loan association does not remain in the till of the asso­
ciation. As funds are received by individual associa­
tions, they are almost at once transferred in the form
of demand deposits to commercial banks. They re­
main as demand deposits of commercial banks until
they are withdrawn in the form of real estate loans
to borrowers; the proceeds of these loans are in turn
re-deposited in banks as builders and other sellers of
houses receive payment from buyers. To be sure,
an individual bank may not receive in demand de­
posits what it loses in time deposits, but viewed
broadly the banking system as a whole does.8 And
recent experience indicates that demand deposits can
in general be put to more profitable use than can time
deposits, for net profits as a percentage of capital
accounts appear to decline as the ratio of time deposits
to total deposits increases.9

In summary, in the Eighth Federal Reserve District
there has been little increase in bank
concentration<. t .

At the beginning of this series of two articles it was
suggested that final answers to the broad questions of
changing bank structure in the United States must
await detailed investigation of many regional groups.
In the Eighth Federal Reserve District, however, cer­
tain conclusions clearly emerge. Although district
banks have accumulated branches in the jurisdictions
where they are permitted at about the same rate as
banks in the country as a whole, branches have been
characteristically small and few in number. Since
1950 the District has fallen behind the country in
number of mergers, and such combinations as have
occurred have involved only a handful of large in­
stitutions. As has just been observed, group banking
and chain banking have gained footholds only in cer­
tain parts of the district. It can only be concluded
that multiple-unit banking and mergers have not
substantially changed either the number of banking
establishments or the larger banks’ share of total
resources.
s Against the demand deposits the banks will, of course, have to keep a
higher percentage of reserves than they would against time deposits.
0 See, for example, member bank operating ratios in the Federal Reserve
Bulletin. June 1956, p. 650. It scarcely needs to be added that an individual
bank, through careful management of the investment of time deposits, may
find them as profitable as demand deposits. The generalization for all banks
holds nevertheless.

. . . and banks have recently been faced with
more intense interindustry rivalry.

In short, banking in the Eighth Federal Reserve
District maintains its characteristic structure, with a
large number of independent units under separate
managements. Towns and cities ordinarily have
relatively few commercial banks, but the growth of
competing financial institutions has led to a vigorous
rivalry which can become more intense as time goes
on. The chief areas of contest have been examined,
but others may be developing as financial institutions
grow to meet the ever more selective demands of the
rapidly expanding economy.




The fact remains that in recent years resources of
banks in the Eighth District, like those of banks
countrywide, have grown at about the same rate as
the economy has grown. Banks have shown a re­
markable ability to furnish new services and to make
new types of loans, and the rise of competing savings
intermediaries has chiefly had the effect of changing
liabilities from time to demand obligations. Within
the traditional structure of American banking both
Eighth District bankers and their customers seem to
be competing satisfactorily in a changing institutional
environment.
Ross M.

SUBSCRIPTIONS to the Monthly Review are available to the public
without charge* For information concerning bulk mailings to banks,
business organizations and educational institutions, write: Research
Department, Federal Reserve Bank of St Louis, St. Louis 2, Missouri.
Articles or excerpts may be reprinted. A credit line would be ap­
preciated.

R obertson

OF CURRENT CONDITIONS
Released for publication October 1

B u sin e ss ACTIVITY in the Eighth Federal Reserve District during September continued at a high
level after allowance for seasonal factors. Model
changeovers at automobile plants caused the usual
temporary slowdowns in industrial activity and in­
crease in unemployment. But other plants were gen­
erally busy. Department store sales continued larger
than a year earlier. Increases in average wholesale
prices persisted through September 25. And the har­
vest was well underway, with larger corn and soy­
bean crops in prospect. On the other hand, some
indicators were less encouraging. Total employment
in August in three of the five largest areas in the
district was less than a year earlier in contrast to a
3 per cent gain for the nation. Loan volume declined
slightly compared with an increase usual at this time
of year.
Industry

After a rapid recovery in August from the impact
of the steel strike, district industrial activity appears
to have leveled off in September, allowing for sea­
sonal influences. Steel ingots were poured out at 91
per cent of capacity in the St. Louis area in Septem­
ber, reflecting a slow recovery from the Labor Day
vacation period. Automobiles were assembled at a
very low rate as the shift was made to the new models.
Lumber output, instead of rising further in early
September, held about the same as in August. Live­
stock slaughter was affected by a strike near month’s
end and a further cutback in farm machinery output
was scheduled.
Mineral output, however, was on the strong side.
Crude oil production increased from its already high
level and coal production continued to show a strong
seasonal upturn.
Labor Markets

In August employment in the nation’s nonagricultural establishments, on a seasonally adjusted basis,
returned to the peak June level, as activity in manu­
facturing, mining and railroad industries generally
Page 122



recovered from the effects of the steel strike. Em­
ployment was 1.3 million or nearly 3 per cent greater
than a year earlier and unemployment at 2.2 million
was about the same as a year ago.
In contrast to the national picture, employment in
the district’s larger metropolitan areas in August was
less than a year earlier. Higher employment in Mem­
phis and Little Rock was more than offset by lower
employment in St. Louis, Louisville and Evansville.
EMPLOYMENT IN NONAGRICULTURAL ESTABLISHMENTS
(in thousands)
August
1956
St. Louis....................................
Louisville.................................
Memphis...................................
Evansville.........
..................
Little R ock .........
...........
Total District Areas...............
United States...................... ..

719.9
245.9
186.0
67,6
70.0
1,289.4
51,789

August
1955
725.5
247.3
180.6
74.8
69.4
1,297.6
50,484

Per Cent
Change
- - 0 .8
— 0.6
+ 3 .0
— 9.6
+ 0.9
— 0.6
+ 2 .6

Source: State Employment Security Divisions and U. S. Bureau of Labor
Statistics.

In September a number of developments, most of
them temporary in nature, caused unemployment to
rise. The number of insured unemployed in the
nation increased in the week ended September 8,
largely reflecting temporary layoffs at automobile
plants. In St. Louis and Evansville the number of
insured unemployed increased in the four weeks
ended September 22, while in Louisville and Mem­
phis there were slight decreases. While most auto­
mobile assembly plants began recalling workers in
September, layoffs were scheduled for October at
two farm equipment plants in Louisville and Memphis.
Trade

Consumers bought a record amount of merchandise
from the nation’s stores in August. Preliminary esti­
mates indicated that retail sales on a seasonally ad­
justed basis increased 1 per cent from July to August
and continued about 4 per cent above a year ago.
The strength was primarily in the sales of nondurable
goods stores, which were 10 per cent greater than a
year earlier compared with a drop of 5 per cent for
durable goods stores. Automobile sales continued to

run below year earlier levels; however, on a daily
average basis, they declined only 6 per cent from
July, about the usual change expected at that time
of the year. At district department stores nondurable
lines were also stronger than durables; apparel sales
in August were 10 per cent larger than a year earlier
compared with a 6 per cent gain for home furnishings.
In the first three weeks of September department
store sales, both nationally and in the district, con­
tinued larger than a year ago. Automobile sales in
the first 10 days of September in the nation were
reported to have slowed further as the model year
drew to a close.
With sales of nondurable goods stores rising, inven­
tories have been built up. At the end of July stocks
at nondurable goods stores were 7 per cent larger
than a year earlier. At the end of August, depart­
ment store stocks were 8 per cent ahead of August
1955. Inventories of durable goods stocks were
about 2 per cent less than a year earlier, reflecting
largely a drop in stocks at automotive, lumber, build­
ing materials and hardware stores.

Prices in the primary markets continued to rise in
September. The index of spot prices of 22 sensitive
commodities rose about 1 per cent from the end of
August through September.
The more compre­
hensive index of average wholesale prices also in­
creased from mid-August to September 25. Prices
of farm products and processed foods rose about 1
per cent while the average of industrial materials
gained only slightly in the period. Wholesale prices
of meats jumped 9 per cent in the period.
In August the consumer price index declined
slightly from July largely reflecting a drop in food
and apparel prices. The decrease in food prices was
primarily seasonal in nature. Other components of
the cost of living, however, continued to rise slowly.
The total index was 2 per cent greater than a year ago.

Total loans at district banks showed a moderate
decline during the four weeks ended September 19
compared with the usual rise of about 3 per cent at
this time. Business loans in the aggregate contracted
during the period under review reflecting sizable net
reductions in outstanding loans to metal producers




and sales finance companies. The continuation of
net repayments from metal and metal products firms
was partly due to a contraction in inventories. Sales
finance companies reduced bank loans in district
banks largely by borrowing in other markets. Also
outstanding indebtedness of commodity dealers
(normally heavy borrowers at this time) increased
only slightly reflecting both net sales by banks of
commodity dealer paper and some net repayments of
loans made to these customers during the summer to
purchase cotton from the Commodity Credit Corpo­
ration for export under the new disposal program.
Consumer loans (as indicated by changes in the
"other” loan category) and real estate loans declined
moderately.
In addition to the decrease in the volume of loans
outstanding, the district weekly reporting banks liqui­
dated on balance $28 million of investment holdings
and received a sizable net inflow of funds. The
growth in deposits came from other banks, businesses
and individuals. As a result, the banks were able to
improve their cash assets and reduce the level of
their borrowings.

Good crop harvesting conditions prevailed over
most of the Eighth Federal Reserve District during
the month of September. Generally there was little
rainfall, however, and soil preparation and seeding of
small grains were retarded. Pasture conditions also
deteriorated over most of the district during the
month, necessitating the early feeding of hay and
silage.
Crop production estimates as of September 1 for
three major district crops compared with 1955 pro­
duction indicate greater outturn of corn and soybeans,
but less cotton output.
CORN
Millions
of Bushels
1956
1955
18.3
Arkansas.............
Illinois...............
586.7
Indiana...............
277.4
Kentucky...........
79.8
Mississippi.........
37.1
Missouri.............
195.1
Tennessee...........
56.6
United States. . . 3,335.7

19.6
524.0
276.1
79.3
48.4
165,2
61.3
3,241.5

SOYBEANS
Millions
of Bushels
1956
1955

COTTON
Thousands
of Bales
1956
1955

24.0
128.5
54.3
2.6
10.5
47.2
4.9
461.9

1,475

—
—
i
—
.

1,663

1,620
410
575
13,115

2,023
410
623
14,721

21.9
98.3
43.8
2.4
12.0
34.0
4.5
371.1

—
—
—

Prices of most major district commodities declined
during the four-week period ending September 21;
however, on balance prices received by Eighth Dis­
trict farmers remained above that of last year.

Page 123

VARIOUS INDICATORS OF INDUSTRIAL ACTIVITY

Aug. 1956*
compared with
July 1956 Aug. 1955

Aug.
1956

Industrial Use of Electric Power (Thousands of KWH per working day, selected
industrial firms in 6 district cities)...............................................................................
Steel Ingot Rate, St. Louis area (Operating rate, per cent of capacity)........................
Coal Production Index— Sth Dist. (Seasonally adjusted, 1 9 4 7 -4 9 = 1 0 0 )....................
Crude Oil Production— 8th Dist. (Daily average in thousands of bbls.).............
Freight Interchanges at St. Louis. (Thousands of cars— 25 railroads— Terminal
R. R. A ssn .)........................................................................................................................
Livestock Slaughter— St. Louis area. (Thousands of head— weekly average).........
Lumber Production-—S. Pine (Average weekly production— thousands of bd. ft,). .
Lumber Production— S. Hardwoods. (Operating rate, per cent of capacity)...........

N.A.
92
97 p
384.6

N.A.
+ 1
+ 13
—
0—

N.A.
— 8
+ 11
- 0-

106.9
103.3
209.9
96

+ 10
— 1
+ 5
+ 20
+ 6
+ 2
+ 4
+ 7
*
Percentage change is shown in each case. Figures for the steel ingot rate, Southern hardwood rate, and the coal
production index, show the relative percentage change in production, not the drop in index points or in percents of
capacity.
p Preliminary. N.A. Not available.

BANK DEBITS1
Aug.
1956
(In
millions)
Six Largest Centers:
East St. Louis—
National Stock Yards,

111..................................... $ 142.9
181.2
Evansville, Ind............
193.4
Little Rock, Ark..........
925.5
Louisville, Ky...............
789.4
Memphis, Tenn.
.
St. Louis, Mo............. 2,330.7
Total— Six Largest
Centers ............. . $4,563.1

Cape Girardeau, Mo.
El Dorado, Ark.
Fort Smith, Ark.
Greenville, Miss.
Hannibal, Mo.
Helena, Ark...............
Jackson, Tenn.
Jefferson City, Mo.
Owensboro, Ky..........
Paducah, Ky. ...........
Pine Bluff, Ark. . . . .
Quincy, 111.................
Sedalia, Mo. ...........
Springfield, Mo..........
Texarkana, Ark.

s:
■$

41.1
18.2
29.1
55.7
27.3
10.6
8.3
27.3
77.4
45.1
26.9
35.1
38.1
15.6
92.0
21.9

Total— Other
Centers ............... - $ 569.7

+ 6
+ 10
+ 1

+ 9?
<
+ 3
+ 9
+ 6
+ 18
+ 6

+

3%

+

+
+
—
—
+
_
+
—
—
—
+
+
—
—
—
+

10%
5
4
3
6
2
6
1
14
2
3
4
4
1
5
2

+
+
+
+
+
+
+
+
+
+

— 2%
+

2%

8%

7%
20
7
4
6
2
17
14
12
1
- 0+ 16
—- 3
— 4
+ 9
+ 7
+
+

$5,132.8

+ 3%
— 7
— 3

7%

Percentage Change
Jan. thru July
July 1956
1956
from
(In thousands
compared with
July
_ July_jLQ55 1955____ 1954
of dollars)
1956
+ 30% + 1 9 %
Arkansas. . .
$ 23,679 + 1 1
170,482 + 5
— 3
Illinois........
+ 8
Indiana. . . .
— 13
99,790 — 1
— 8
Kentucky . .
— 21
29,295 + 10
— 17
Mississippi .
+ 31
20,201 + 20
+ 17
Missouri . .
85,692 — 14
— 9
— 14
— 5
26,787 + 16
Tennessee. . .
+ 11
— 6
7 States. .
455,926 + 1
+ 2
__ 4
8th District
183,423 — 1
+ 4
Source: State data from US DA preliminary
estimates unless otherwise indicated.

INDEX OF BANK DEBITS— 22 Centers
Seasonally Adjusted (1947-1949= 100)
1956
1955
Aug.
Ju\y_ Aug.
169.4
159.0
171.5
1 Debits to demand deposit accounts of individuals,
partnerships and corporations and states and political
subdivisions.

(1 947-1949= 100)
July 1956 June 1956 July 1955
Unadjusted
T otal...........
Residential
All Other. .

249.3 p
259.7 p
244.4 p

266.8
297.3
252.6

Seasonally adjusted
Total...........
194.0 p
Residential.
222.0 p
AllOther . ..
181.0 p

208.6
293.8
169.0

224.3
254.1
210.5

165.1
251.1
125.2

* Based on three-month moving average
(centered on mid-month) of value of awards, as
reported by F. W, Dodge Corporation.
P P relim inary

Weekly Reporting Banks

(In M illion s o f D ollars)

Assets

Sept 19, 1956

Loans1 ..............................................
Business an d A g r i c u l t u r a l ...........

Security

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

R eal Estate ........................................
O ther (larg ely co n su m e r) ...........

U. S. Government Securities . . . .
O ther Securities ..................................
L oans to Banks .....................................
Cash Assets .............................................
O th er Assets ..........................................

Total Assets

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

$1,614
827
61
281
469
857
225
33
922
46
$3,697

Change from
Aug. 22,
1956
$— 8
— 6

All Member Banks
Aug. 29,
1956

Change from
July 25,
1956

$2,586

$ + 11

1,848
484

+ 44
— 4

1,356
71
$6,345

— 50
+ 1
$+ 2

+ 6

—
1
— 6
— 30

+ 2

+ 14
+ 89
- 0$ + 67

L ia b ilities and C a pital
D em a n d D eposits o f Banks ..........
$ 709
$ + 59
$ 690
$— 4
—
1
O th er D em a n d D e p o sits ..................
2,056
+ 19
3,815
T im e D eposits
575
1,255
4
—
1
B orrow ings and O th er L ia b ilitie s
79
-— 13
101
T o ta l C apital A c c o u n ts .....................
- 0484
278
4
T otal L iabilities and C a p ital . ,
$3,697
$ + 67
$6,345
$+ 2
l F or w e e k ly re p o rtin g banks,
>ans are adjusted to exclude loans to banks; the total is reported
net; breakd ow n s are r e p o rte d gross, For all member banks, loans are reported net and include loans
to banks; b r e a k d o w n o f these lc
not available.

+ 2

DEPARTMENT STORES
Percentage of Accounts
Stocks- and Notes Receivable
Sales Outstanding Aug. 1, ’56,
Ratio collected during August
Excl.
Instal. Instalment
Accounts Accounts

Stocks
on Hand
Net Sales
Aug., 1956
8 mos. ’56
compared with
to same
July, ’56 Aug., ’55 period ’55 _
Sth F.R. District Total . . + 2 2 %
46
7%
15
Fort Smith Area, A rk .i. . + 1 7
41
+ 3
Monthly stocks and
Little Rock Area, Ark.. . . + 2 6
+ 12
13
40
stocks-sales ratio data
................. ..... + 3 5
Quincy, 111.
+ 1
not available in time
+ 8
Evansville Area, Ind........ ......+ 1 7
for publication in the
18
45
Louisville Area, Ky., Ind.
+16
+ 5
Monthly Review. Data
+ 11
Paducah, K y..........................+ 1 2
will be supplied upon
17
55"
+ 23
St. Louis Area, Mo., 111.
+ 6
request.
Springfield Area, Mo........
+15
+ 11
11
31
+ 25
+ 10
Memphis Area, Tenn.
+ 16
+ 15
All Other Cities2
1 In order to permit publication of figures for this city (or area), a special sample has been con­
structed 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 computing depart­
ment store indexes.
2 Fayetteville, Pine Bluff, Arkansas; Harrisburg, Mt. Vernon, Illinois; Vincennes, Indiana; Dan­
ville, Hopkinsville, Mayfield, Owensboro, Kentucky; Chillicothe, Missouri; Greenville, Mississippi;
and Jackson, Tennessee.
Outstanding orders of reporting stores at the end of August, 1956, were 2 per cent larger than
on the corresponding date a year ago.
INDEXES OF SALES AND STOCKS— 8TH DISTRICT
Aug.
1956
117
129
N.A.
N.A.

July
1956
104
135
128
139

Sales (daily average), unadjusted3 . .
Sales (daily average), seasonally adju,
Stocks, unadjusted4 ............................
Stocks, seasonally adjusted4 .............
3 Daily average 19 47-49= 100
4 End of Month average 1947-49 = 100
N. A. Not available.
Trading days; Aug., 1956— 27; July, 1956— 25; Aug., 1955— 27.




INDEX OF CONSTRUCTION CONTRACTS
AWARDED EIGHTH FEDERAL RESERVE DISTRICT*

ASSETS AND LIABILITIES OF EIGHTH DISTRICT MEMBER BANKS

00

Total— 22 Centers

CASH FARM INCOME
Aug. 1956
compared with
Aug.
July
1955
1956

June
1956
116
119
127
138

Aug.
1955
109
120
126
126

+
+

RETAIL FURNITURE STORES
Net Sales
Inventories
Aug., 1956
Aug., ’56
compared with
compared with
July ’56 Aug.’55 July ’56 Aug.’55
.
. -_
8th Dist. T otali. . + 23%
-0-% -0+ 5%
6
St. Louis Area. . . . + 2 4
1 —3
+
+
3
Louisville Area. . . + 2 6
+ 4
+ 9
★
Memphis Area. . . + 27
+ 1 —*
-2
—1
Little Rock Area + 11
+ 17
4
3
Springfield Area. . + 2 3
8
- ■
—
+
+
* Not shown separately due to insufficient coverage,
but included in Eighth District totals.
1 In addition to the following cities, shown separately
in the table, the total includes stores in Blytheville, Fort
Smith, Pine Bluff, Arkansas; Owensboro, Kentucky;
Greenwood, Mississippi; Evansville, Indiana; and Cape
Girardeau, Missouri.
Note: Figures shown are preliminary and subject to
revision.

PERCENTAGE DISTRIBUTION OF
FURNITURE SALES
Cash Sales ...............
Credit Sales .............
Total Sales ...........

Aug., ’56
14%
86
100%

July, ’56
14%
100 %

Aug., ’55
13%
87
100 %