The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
SEPTE M BER 1, 1946 Survey of Current Conditions The recent controversy over price control exten sion tended to obscure the strong resurgence in pro duction that was occurring simultaneously, and to relegate to a secondary position the fact that over all output is at a postwar peak, well above any previous peacetime level. Current indicators point to the likelihood that production increases will con tinue during the remainder of the year provided the economic machine can remain free from stoppages due to industrial strife. Income payments to individuals are at an annual rate only fractionally below that of the record high of last year, with disbursements by private industry at an all-time high. Despite reported buyers’ strikes in scattered areas in reaction to the steadily rising price level, retail sales volume continues at a near-record level. Whether determined consum ers’ resistance to further price increases will develop when the full effect of recent advances is felt by consumers is not yet apparent. If prices can be held within reasonable limits, there is little likeli hood that consumer buying will slump seriously during the remainder of the year. The fact that dividend payments in the second quarter were nearly 4 per cent larger than in the same quarter of last year, and in June were only slightly less than in the peak June of 1945 is some indication of business management’s estimate of future operating levels. Housing continues to be a major domestic prob lem. While progress has been made toward achiev ing the nation’s goal, the record to date indicates that substantial increases in residential construction must be secured during the remainder of the year if the objectives are to be fully attained. Shortages of many building materials persist, resulting in a decrease in the number of new dwelling units started and virtually doubling the required comple tion time as compared with that under normal pre war conditions. EMPLOYM ENT The high level of industrial production is re flected in Eighth District employment. Nonagricultural employment increased sharply in July with ap preciable gains reported in all industrial groups except transportation and public utilities. In addi tion to a continued seasonal rise in the number of workers in the construction industry, a substantial increase occurred in manufacturing employment in response to the generally higher level of industrial activity. Employment in the trades and service in dustries continued to increase but at a lesser rate than in recent months. Current forecasts indicate a substantial increase in the demand for labor through the remainder of the year. In the St. Louis area, total employ ment by mid-October is expected to be almost 10 per cent above present levels while in other parts of the district increases of from 5 to 10 per cent are anticipated. Most of the increase will probably occur in manufacturing industries, barring another wave of work stoppages late this year, and in the construction trades. Increased employment in metal-working estab lishments was general throughout the district, ac counting for a substantial part of the rise in manu facturing employment in the St. Louis area. Gains were also reported in woodworking, stone, clay and (Continued on page 8) The Industrial Structure of the Eighth Federal Reserve District An increasing awareness of the desirability of bringing the relationship between industry and agriculture into better balance is developing in many parts of the Eighth Federal Reserve District. There is also increased recognition that a substan tially higher level of community and district income could be achieved through the conversion of a greater proportion of its own raw materials into finished goods in manufacturing plants located with in the district. In order to accomplish these objectives, many communities are attempting to put into operation plans for industrial development which were inter rupted by the war. The development of such plans has been stimulated, in areas where war manufac turing was superimposed upon what was tradition ally a nonindustrial community, by the desire to re gain income benefits suddenly lost at the end of hos tilities. Idle war plant facilities in some areas have also provided a stimulus to such programs. Successful plans for the future industrial develop ment of the district must of necessity take into consideration the present structure of industry. A knowledge of industry as it now exists is the start ing point in fashioning a long-range program of industrial development designed to give the people of this district a better balanced economic life and a higher standard of living. CHARACTERISTICS OF DISTRICT IN DUSTRY The Eighth District is essentially rural in charac ter with about two-thirds of its population in rural communities in 1940. However, industry generally and manufacturing specifically are important to the district economy. In 1940 there were 3.3 million workers employed in the district. Of this total, 484.000 or IS per cent were in manufacturing, 192.000 or 6 per cent were employed in transporta tion and public utilities, 128,000 or 4 per cent were engaged in construction work and 70,000 or about 2 per cent were in mining activities. Combined em ployment in these industries amounted to 876,000 or 27 per cent of total employment. Agriculture, however, employed 2.5 times as many persons as manufacturing and 40 per cent more than the com bined total of all industries listed above. In terms of national production, the output of district manufacturing establishments is relatively; small. In 1939, about $2.5 billion of manufactured Page 2 goods were produced in the area according to Census of Manufactures figures, of which approxi mately $1.0 billion represented value added by man ufacture. The value of production in that year amounted to some 4 per cent of the United States total. During the war period, the value of output increased sharply, reaching a peak estimated at $7.7 billion in 1944 followed by a decline in 1945 to about $6.7 billion. In terms of physical volume of pro duction, output in 1945 probably was more than twice as great as in 1939. Eighth District industry is typically small busi ness. Manufacturing establishments, measured either in terms of number of employees or value of output, are somewhat smaller on the average than in the nation as a whole. They employ fewer wage earners with wages tending to run below the na tional average. The value of production and the value added to the cost of materials by the manufac turing process are somewhat less, per wage earner, than in the rest of the nation. A rather well-defined distinction exists between the average plant located in one of the four major industrial areas of St. Louis, Louisville, Memphis and Evansville and those operating in other parts of the district.* In the industrial areas, average employment per plant is larger than in the remain der of the district, amounting to 48 wage earners per plant in 1939 as compared with 33 in the rest of the district and 43 in the nation as a whole. The value of goods produced in the industrial centers as well as the value added by manufacture averaged 80 per cent greater per wage earner than in the plants outside the leading cities. CONCENTRATION OF INDUSTRY As indicated in the accompanying chart district manufacturing is heavily concentrated in the four industrial areas. In 1939, about 45 per cent of the manufacturing establishments were in these centers and they accounted for more than one-half of the total manufacturing employment and for 70 per cent of the value of district manufacturing produc tion. By far the largest is the St. Louis area whose plants in 1939 employed 35 per cerit of the manu * A s used in this article the St. L,ouis industrial area consists o f St. Xsouis C ity and County, M issouri and M adison and St. Clair Counties, Illin o is; the Louisville area o f Jefferson C ounty, K en tu cky, and F loyd County, In diana; the Evansville area o f V anderburg C ounty, Ind ia n a ; and the M emphis area o f Shelby County, Tennessee. facturing wage earners and accounted for 45 per cent of the value of manufactured goods produced in the district. Louisville factories produced 13 per cent of the district’s output, Memphis 7 per cent and Evansville 5 per cent. In general, district manufacturing is quite well diversified, although employment as well as the value of goods produced in the nondurable indus tries is somewhat larger than in the heavy indus tries. EIGHTH DISTRICT MANUFACTURING EMPLOYMENT BY INDUSTRY GROUPS— 1940 N um ber Per Cent of of M anufacturing Employees Em ploym ent A ll M anufacturing .......................................................... Durable Industries .......................................................... Basic and Finished Lum ber.................................. M achinery ................................................................... Iron and Steel............................................................. Stone, Clay and Glass............................................. Autom obiles and A ccessories................................ N on-ferrous Metals .................................................. Transportation E q u ip m e n t.................................... N ondurable Industries .................................................. F ood P rocessing ...................................................... Textiles and Apparel............................................... Leather and P roducts............................................. P rinting and Publishing............. ................. ......... Chemicals ................................................................... Products of Petroleum and C oal....................... Paper and P rodu cts.......................... ...................... M iscellaneous ............................................................. S ource: Bureau of the Census. 484,000 213,000 93,000 36,000 35,000 20,000 14,000 10,000 5,000 271,000 71,000 55,000 46,000 27,000 22,000 11,000 9,000 30,000 100% 44 19 8 7 4 3 2 1 56 15 11 10 6 4 2 2 6 The nondurable industries employed more than one-half of the manufacturing workers in the dis trict according to the 1940 census of population. Food processing, textiles and leather goods indus tries were most important and accounted for almost two-thirds of the total nondurable industries’ em ployment. In the heavy industry group, almost 44 per cent of the workers were engaged in the manu facture of lumber and finished lumber products. Production of iron and steel and their products and various types of machinery accounted for 33 per cent of total durable industries’ employment. Most of the production (in terms of value) in the industrial areas is accounted for by the manufacture of nondurable goods. In 1939, from 55 to 60 per cent of the value of output was in the nondurable group. In Evansville, the value of durable goods production was larger than that of nondurable goods, reflecting the relatively large output of ma chinery, refrigerators, automobiles and other heavy items. Approximately 65 per cent of Evansville’s production was in the durable group as compared with about 35 per cent in the St. Louis area and roughly 30 per cent in Louisville and Memphis. There are some indications, however, that dur able goods industries are becoming relatively more important in the district economy. In the St. Louis area, for example, estimated future employment in the heavy industries is expected to account for about 55 per cent of total manufacturing employment as compared with less than 50 per cent in the prewar period. In Memphis, the largest new industrial con cern locating in the area is an agricultural equip ment manufacturing plant with estimated peak em ployment requirements of 3,000 workers. During the war period, the district received new facility awards totaling about $2.2 billion in cost, of which approximately $1.6 billion in cost was for new industrial plant facilities. About 47 per cent of the $1.6 billion represented expenditures for structure and about 53 per cent those for equipment. The expansion of the district’s industrial plant during the war was considerable, more than in any other comparable length of time in history. The net addition to the district’s prewar manufacturing ca pacity, however, tends to be overstated when meas ured in terms of construction costs, which in war time were inflated far beyond normal replacement costs. Also the potential usefulness of the increased capacity is less than deflated cost figures would in dicate for much of it was designed for straight mu nitions output and has little peacetime use. A fair amount of the new capacity is, however, useful for peacetime production, either as it exists or as it can be converted. There has been some progress made in disposing of a portion of the district’s major war plants, al though the dollar value of assets sold or leased to date is a negligible portion of the total value of such plants constructed. In some instances, for example the alumina plants in Arkansas and the aluminum products plant in Louisville, the adaptation to E S T I M A T E D D I S T R I B U T IO N OF M A N U F A C T U R IN G IN THE E IG H T H D I S T R I C T - 1939 20 40 60 80 100 NUMBER OF E ST A B L ISH M E N T S AVERAGE NUMBER OF WAGE E A R N E R S WAGES PAID TO WAGE E A R N E R S VALUE OF PROOUCTS VALUE A D 0 E 0 BY MANUFACTURE 20 ■ so u rc e bu r ea u IN D U ST R IA L AREAS of th e V777\ K///A 40 60 80 O U TSID E IN D U ST R IA L A R E A S 100 c en sus Page 3 peacetime production involved no major reconver sion problems. The former Republic Aviation plant in Evansville has been converted into a plant for the production of milk coolers, and one part of the W olf Creek Ordnance Plant in Milan, Tennessee, has been purchased to be used for the production of footwear. While a large part of the district’s # war-built plants will find no peacetime use, the avail ability of idle plants should tend to facilitate the efforts of some communities to develop the indus try of their areas. INDUSTRIAL DECENTRALIZATION AND THE FUTURE In attempting to appraise the outlook for the future development of industry in this district, some attention must be given to the potential bene fits that might result from an increase in decen tralization of industry. During recent months there has been some indication that at least a part of the initiative with respect to the establishment of new manufacturing plants in the district has come from within industry itself. Although the evidence is insufficient to conclude that a major resumption of the trend toward decentralization is under way, there are indications that during the next few years more companies will attempt to locate production and distribution points in closer proximity to raw materials and consumer markets in an effort to off set rising costs. Decentralization of industry is not a new idea. In this district its effect has been apparent in sev eral industries for some time. Small factories for the manufacture of shirts, dresses and various other types of garments sprang up throughout the dis trict during the decade prior to the war. The num ber of shoe factories has increased sharply in recent years, especially outside the rftajor industrial areas. In Arkansas, for example, there are now nine shoe manufacturing plants in operation or under con struction as compared with none in 1939. Similar developments also have occurred in the food proc essing industry; canning factories and, in recent years, frozen food processing plants have been built in increasing numbers in many of the leading agri cultural sections of the district. During the war, the ban on construction of all but essential war production facilities abruptly cur tailed expansion plans for most industries. H ow ever, the many new plants which were constructed in scattered parts of the country as a part of the war production program as noted led to considerable ex pansion of prewar productive capacity. Subcon tracting to smaller firms frequently resulted in an increase in capacity of existing plants or the conPage 4 struction of new facilities in communities located well outside the nation’s industrial centers. To the extent that such war-constructed plants can be adapted to the production of civilian goods, the war plant construction program may prove to be of con siderable importance in promoting further decen tralization of industry. Probably the most important incentive to indus try to decentralize its operations is the pressure to reduce costs in order to maintain profit margins. Although temporary relief may be sought through higher finished goods prices, industry in the long run is faced with the major problem of protecting profit margins through lower costs. Most of the current emphasis appears to be focused on increased output per man-hour as the primary source of cost reductions, but many companies also are examin ing distribution costs in an effort to achieve this ob jective. There are some indications that a consider able shifting of shipping and sales centers may occur as manufacturers strive for reductions in their dis tribution costs. The district economy may benefit considerably by an increase in industrial decentralization, particu larly in industries that are closely related to the resources of this area and which typically involve relatively small-scale production. Conditions gener ally seem to be more favorable to the operation of smaller manufacturing plants than of very large es tablishments in the areas outside the large metro politan regions. In most parts of the district popu lation concentrations are not sufficient to support manufacturing operations on the large-scale, mass production, long assembly line basis characteristic of major industrial centers. This does not mean, of course, that no more big industrial plants can be located advantageously in the district. The urban areas, both large and me dium-sized, may reasonably be expected to grow7, partly through natural increase and partly by mi gration from rural regions, and thus build up larger pools of industrial labor. At the same time, im proved transportation facilities should make it pos sible to draw on a labor supply scattered over a con siderable area. The record of the war years shows that workers from small towns and rural areas can be drawn into large-scale operations at a central manufacturing location and that they can be ab sorbed with relative ease in training. Where other factors are favorable to industry location, lack of a completely adequate labor supply at that immedi ate location should not necessarily preclude estab lishment of relatively large-scale industry. CONCLUSIONS The prospects for industry in this district appear bright. The most encouraging factor, perhaps, is that community leaders throughout the district are becoming increasingly aware of the potential ad vantages which would accrue from a more balanced relationship between industry and agriculture. Par ticularly in the south is recognition of these ad vantages growing and in the coming years there should be seen a steady growth of industry, mostly small-scale manufacturing, in that area. Weldon A. Stein International Bank Securities The International Bank for Reconstruction and Development formally began operations on June 25, 1946. Under the Articles of Agreement, 20 per cent of the subscribed capital was to be paid in or be subject to call as needed for operations. Calls for 10 per cent of subscribed capital have already been announced. Tw o per cent payable in gold or United States dollars was due on or before August 24, and the other 8 per cent payable in the member countries’ own currencies is due by November 25, 1946. The Bank has stated that early consideration will be given to calling up the remaining 10 per cent (also payable in the members’ currencies) au thorized for operations. The authorized capital of the International Bank is $10 billion (United States dollars), of which $9.1 billion is reserved for the countries that were rep resented at the Bretton W oods conference which drew up the Bank’s Articles of Agreement. At the present time, the International Bank has 38 mem bers and a subscribed capital of $7,670 million, the subscription of the United States being $3,175 mil lion. On the basis of this membership, paid-in capital by November 25 will amount to $767 mil lion, $407.4 million in gold and United States cur rency, and the equivalent of $359.6 million in cur rencies of the other member nations. Actual lending operations probably will begin this fall. The Bank may make or facilitate loans in any of three ways. It may make or participate in direct loans out of its own funds, corresponding to its unimpaired paid-in capital, surplus and available reserves. Since only 20 per cent of its subscribed capital may be called for the purpose of making or participating in direct loans, and since it now has no surplus or reserves, total loans by this method are at present limited to a maximum of $1,534 mil lion. The Bank may also make or participate in direct loans out of funds borrowed in the market. Finally, the Bank may guarantee, in whole or in part, loans made by private investors through the usual investment channels. It is anticipated that borrowers will desire and the Bank w^ill prefer to make direct loans rather than guarantee private issues. Since demand for loans is likely to be much greater than funds avail able from paid-in capital, an offering of the Bank’s own securities seems likely soon after lending opera tions begin. Most of these securities probably will be sold in the United States because this nation is about the only member country able to afford large capital exports at present and because general conditions in the capital market here seem to be favorable. Therefore the regulations and princi ples governing the operation of the Bank which affect the investment status of its securities are of prime interest. Purposes of the Bank— The purposes of the Inter national Bank may be summarized as follow s: 1. T o assist in economic reconstruction and de velopment in member countries by facilitating in vestments for productive purposes. 2. To promote private foreign investment by guaranteeing or participating in loans made by private investors and, when private capital is not available on reasonable terms, to provide financing out of its own resources and from funds raised in the market. 3. To promote the long-range, balanced growth of international trade and the maintenance of equi librium in balances of payment by encouraging in ternational investment for the development of the productive resources of member nations. 4. To coordinate its financing with international loans made through other channels so that the more useful and more urgent projects will be taken care of first. 5. T o conduct its operations with due regard to the effect of international investment on business conditions in the territories of members. Procedure in Making and Guaranteeing Loans— Additional safeguards have been provided in estab lishing certain procedures to be followed in making and guaranteeing loans. Applications must be reviewed by a competent committee, which shall include an expert selected by the Governor reprePage 5 senting the member in whose territory the proposed project is located and one or more members of the technical staff of the Bank. This committee must make a careful study of the merits of the proposed project and submit a written report recommending it before a loan or guarantee can be granted. In considering applications, the Bank must give due regard to the prospects of the borrower being able to meet his obligations under the loan, and must act prudently in the interests both of the borrower and of the member countries as a whole. The Bank is not to grant or guarantee a loan until it is satisfied the borrower could not otherwise se cure the funds on reasonable terms. Moreover, the Articles of Agreement provide that “ only economic considerations shall be relevant to their (the Bank and its officers) decisions, and these considerations shall be weighed impartially in order to achieve the purposes . . . of the Bank. There are other miscellaneous regulations regard ing the granting or guaranteeing of loans. If the borrower is other than a member government, both the principal and interest of the loan must be fully guaranteed by the Government, the central bank, or a comparable agency of the member country in which the project is located. No restrictions shall be imposed to the effect that the proceeds of a loan are to be spent in the territory of any particular member. Neither shall the Bank guarantee loans made by others without receiving suitable compen sation for its risk. Restrictions on Use of Funds— The Articles of Agreement place a number of restrictions on the use of the Bank’s funds. These restrictions relate mainly to the purposes of the loans and guarantees and the total of loans and guarantees which may be outstanding at any one time. The purposes of the Bank as listed in the Articles of Agreement, limit loans and guarantees to mem ber nation? for productive purposes. A still fur ther restriction, however, is that loans and guaran tees are to be made only for specific projects of re construction and development, except in special cir cumstances. To make effective this principle of loans for specific projects only, the Bank must make arrangements to insure that the proceeds of each loan are used only for the purposes intended. In case of direct loans made by the Bank, the proceeds are to be credited to the account of the borrower and are to be drawn on only to meet expenses as they are actually incurred in carrying out the project. The total amount of direct loans, participations Page 6 in loans, and guarantees outstanding at any time can not exceed the total unimpaired subscribed capi tal, reserves and surplus. On the basis of present membership, total outstandings are limited to $7,670 million since the Bank has no reserve or surplus as yet. There is no limitation on the amount of loans and guarantees to individual members, the Articles of Agreement merely stating that the facilities of the Bank shall be used “ exclusively for the benefit of members” with “ equitable consideration” being given to projects for development and reconstruc tion. The Bank is to give special consideration to “ lightening the financial burden and expediting the completion” of the reconstruction and restoration of the economy of members whose metropolitan cen ters suffered great devastation from enemy action. Methods of Meeting Defaults— If defaults on loans made, or particpated in, or guaranteed by the Bank should occur, provision has been made for meeting them. If the default is the result of a tem porary exchange stringency and it appears that relaxation of the conditions of the terms of pay ment would be in the interest of the parties con cerned the Bank may, upon application of the bor rower, either modify the terms of payment or make arrangements to accept payment in the member’s own currency for a period not to exceed three years. In the latter case, appropriate arrangements must be made regarding the use of such currency and the maintenance of its exchange value. If such adjustments do not enable the borrower to meet the payments, and the Bank is called upon to meet its liabilities arising from the default, first resort for funds is a special reserve set up for the purpose. The special reserve will consist of com missions received by the Bank from its loans and guarantees. During the first 10 years of its opera tion the commission charged on the amount of out standing loans, participations, and guarantees shall not be less than 1 per cent nor more than \y2 per cent per annum. After 10 years the commission rate may be reduced if the accumulated reserve is considered sufficient to justify reduction, or may be raised, if such action is deemed necessary. The special reserve is to be held in liquid form such as the executive directors may decide. If, or when, the special reserve is exhausted, the Bank may, at its discretion, use other reserves and surplus available to it. This provision will not afford any protection until the Bank has accumu lated a, reserve and surplus from its loans and guar antees. Next, the Bank may call an appropriate amounl of the unpaid capital subscriptions; the Articles oi Agreement provide for such calls, limited only by the total amount of each country’s share subscrip tion, when necessary to meet the Bank’s liabilities for interest, other charges, or amortization. Pay ments may be made at the option of the member either in gold, in United States dollars, or in the currency required to discharge the obligation for which the call was made. Protection against loss from currency depreciation is provided in that pay ments shall be made in amounts equal in value to the member’s liability under the call, regardless of the then existing value of the member’s currency. If bank officials believe the default may be of long duration, the Bank may call an additional* amount of the unpaid subscriptions not to exceed in any one year 1 per cent of the total subscriptions to: (1) re deem prior to maturity all, or part of, the outstand ing principal of any loan in default guaranteed by the Bank, or (2) to repurchase all or part of its own outstanding borrowings. Security Underlying Own Obligations— To meet its own liabilities the Bank will have the unpaid capital subscriptions which are subject to call to meet defaults and its own assets which will con sist primarily of loans made to or guaranteed by member countries. The relationship between the Bank’s resources and liabilities can best be illustrated by a simplified, hypothetical balance sheet. Demand for loans is likely to be so great that it may be anticipated the Bank will lend the maximum amount allowed; and its balance sheet is drawn up as of a time (neces sarily several years hence) when such loans are out standing. If it is assumed: 1. The total subscribed capital is $7,670 million, that of present membership ; 2. That the Bank will call the maximum of 20 per cent of its subscribed capital ($1,534 million) and that not more than $1,000 million will be used for making direct loans, since part of the paid-in funds will be in currencies for which there is little demand, and part will be held in reserve; 3. That it will make the maximum loans per mitted, namely $7,670 million (assuming no sur plus or reserves will have been accumulated); and 4. That it secures funds for loans, except for $1,000 million of its paid-in capital, by selling its own bonds ; then a simplified balance sheet would appear as follow s: (I n millions of The Bank Would Own Cash (m ostly foreign currencies) .............................. .......... $ 534 I*oans .......... ................................. 7,670 — -----T otal Resources ................... $8,204 U . S. D ollars) The Bank Would Owe Bonds Outstanding ........... .....$6,670 Capital (paid-in) ................. . 1,534 ----------T otal Liabilities and Capital ............................................$8,204 In addition, as a contingent asset, the Bank would have the right to call on member countries, in case of need, for the unpaid 80 per cent of their capital subscriptions; amounts totaling $6,136 mil lion, including $2,540 million callable from the United States Treasury. It is now possible to point out some relationships between the Bank’s resources, both actual and po tential, and its liabilities under the conditions assumed above. The amount of the Bank’s unpaid capital, callable only to meet liabilities, is of course the most important safety factor. The ratio of the Bank’s total resources (including this amount), to its liabilities other than to stockholders would be more than two to one. The unpaid subscription of the United States, amounting to $2,540 million, would be equal to 38 per cent of the $6,670 million of bonds outstanding. To meet the other $4,130 million of its own bonds outstanding ($6,670 million —$2,540 million) the Bank would have available (1) loans amounting to $7,670 million; (2) cash equivalent to $534 m illion; and (3) unpaid capital subscriptions of the other members totaling $3,596 million. This represents a total of $11,800 million as compared to its remaining bond liabilities of $4,130 million— a ratio of 2.9 to 1. These relation ships would not be disturbed if the Bank should guarantee or participate in some loans instead of using all of its available funds in direct loans since this would only change the composition of its lia bilities and not the total. If the Bank should suspend permanently its operations, which may be authorized by a majority of the total voting power of the Board of Gover nors, all activities must cease, except those incident to orderly liquidation of its assets and settlement of its obligations. In this event, direct and contingent claims of creditors must be paid before any distri bution can be made to members on account of their capital subscriptions. The liability of all members for uncalled capital subscriptions and for deprecia tion of their own currencies, shall continue until all claims of creditors, direct and contingent, have been paid. Market for the Securities— In general, the securi ties are expected to enjoy a good market. The spe cific nature and terms of the securities are not yet known, but it seems likely that most of them will be long-term maturities. Prospective purchasers include insurance companies, savings banks, com mercial banks, trust funds, and charitable and edu cational institutions. For the time being, the first two types of investor will be largely out of the Page 7 market since their investments usually are limited to a list prescribed by state law or state supervisory bodies, and so far only New York State has placed securities of the International Bank on its eligible list for savings banks. While it is believed that all or most states will make the securities eligible for investments of insurance companies and savings banks, such action will take some time. In cases where the state legislatures have to pass on eligibil ity, it is likely to be 1947 before action can be taken, since most legislatures are not now in session. As soon as the securities are declared eligible, however, it is expected that both types of institutions will provide an active demand for them. Commercial banks also provide a potential mar- ket for the International Bank’s securities but most of the banks are subject to the legal limitation that investment in the issues of a single maker, other than the United States and its political subdivisions, are limited to 10 per cent of capital and surplus. This requirement would limit commercial bank purchases to about $600 million. Investments of trust funds and nonprofit institu tions normally are not prescribed by state law and they may provide an early market for relatively large quantities of International Bank securities as their cash holdings are large and the pressure for investment outlets is strong. CURRENT CONDITIONS continue to report a considerable turnover among employed veterans, particularly those in the younger age group. (Continued from page 1) glass products, and in meat packing establishments. A definite upward trend in the number of em ployed women is apparent in many parts of the district, even in manufacturing industries where the employment of women had declined steadily since the end of the war. While a part of the increase is due to the temporary summer employment of young girls, the need to supplement family income in order to meet the rising cost of living is probably a factor also. During July, the number of non-veterans receiv ing unemployment compensation payments as well as the number of Servicemen’s Readjustment pay ments declined from the previous month. Employ ment of veterans increased but many employers t INDUSTRY Total industrial activity in the Eighth District in July averaged somewhat higher than in June, pri marily as a result of over-all gains in manufactur ing operations. The higher level of activity ap peared to be general throughout the district and current evidence indicates a continuation of the trend through August. The increase in manufacturing activity was re flected in a sharp advance in the consumption of electric power by industrial consumers in the major district cities. Total consumption in these cities in July reached a new 1946 peak, 14 per cent higher than in June and only 10 per cent below the AGRICULTURE INDUSTRY (K .W .H . in thous.) C O N S U M P T IO N O F E L E C T R IC IT Y N o. of June, July, July, 1946 July, 1946 1946 Cus 1945 compared with tomers* K .W .H . K .W .H . K .W .H . June,’46 July,’ 45 Evansville ... . L ittle R ock. . Louisville .... Memphis ..... Pine Bluff... St. L ou is .... .. 40 35 82 31 19 96 7,359 3,442 20,167 4,195 1,382 64,173 Totals ..... . 303 100,718 * Selected industrial customers. 6,504 3,334 16,652 4,925 1,146 55,736 10,500 3,316 18,076 6,642 6,657 67,137 88,297 112,328 -j—13 % 4- 3 4-21 — 15 4-21 +21 — 30% + 4 +12 — 37 — 79 -0- + 14 — 10 F O R 25 R A I L R O A D S A T ST. L O U I S First nine days July,’ 46 June,’46 July,*45 A u g .,’ 46 A u g .,’45 7 mos. ’ 46 .7 mos.’ 45 125,825 125,012 147,534 38,770 42,140 843,792 1,119,275 S o u rce : Terminal Railroad Association of St. Louis. R E C E IP T S A N D C O A L P R O D U C T IO N July, ’ 46 Illinois ......................... .....5,391 Indiana ...............................2,149 Kentucky .......................... 6,646 Other Dist. States...........1,416 Totals ........................ Page 8 15,602 June, ’ 46 July, ’ 45 5,816 2,062 6,216 1,261 5,460 2,309 5,259 1,378 15,355 14,406 July,’46 comp, with June, ’ 46 July, *45 — 7% + 4 + 7 + 12 + 2 — 1% — 7 +26 -j- 3 + 8 S H IP M E N T S A T N A T IO N A L Receipts July, 1946 Cattle H ogs H orses Sheep and Calves..239,544 ....................... 191,552 and Mules.. 7,653 ....................... 145,499 T otals L O A D S IN T E R C H A N G E D (I n thousands o f tons) Clay J. Anderson .................584,248 June, 1946 135,187 77,337 8,049 165,887 386,460 STOCK YARDS Shipments July, 1945 153,765 105,174 2,829 112,250 374,018 July, 1946 June, 1946 July, 1945 153,179 69,047 7,653 62,493 121,541 37,181 8,049 91,484 97,339 37,748 2,429 41,871 258,255 179,387 292,372 C ASH F A R M IN C O M E (I n thousands June of d o l l a r s ) --------------------------------- 1946 1945 Cumulative for 6 months ------ — — --------------------------------------1946 1945 1944 Arkansas .............. $ 15,881 Illinois ................ ......71,928 Indiana .....................40,803 K entucky ............ ... 18,127 Mississippi .......... ... 13,422 M issouri .............. ... 39,096 Tennessee ............ ... 24,929 $ 14,152 88,552 51,344 20,086 11,385 52,403 23,536 $ $261,4.58 $1,633,629 T otals .............. $224,186 111,209 $ 104,699 532,348 538,912 288,852 295,499. 188,997 232,698 97,244 104,100 269,515 295,010 145,464 142,671 $1,713,589 $ 98,178 583,671 318,138 185,657 85,440 309,454 143,189 $1,723,737 amount consumed in July a year ago. The increase over June was the sharpest month-to-month gain this year and the first advance since April. Manufacturing — Production of manufactured goods in the district was larger than in June with increased schedules indicated in the stone, clay and glass, textiles, automobile and accessories, rubber and rubber products industries. Output in the food processing industry, particularly meat packing, rose considerably as increased supplies became available. W ork stoppages in the St. Louis area curtailed pro duction of chemicals, shoes and certain lines of iron and steel products but, in general, manufacturing was uninterrupted by labor disputes during the month. The steel industry operated at about 29 per cent of capacity in July, fractionally below the rate maintained in June and considerably less than in July of last year. The strike which kept one district plant out of production for five months was settled in August, a development of major importance to a number of steel products manufacturers in the area who normally obtain a considerable portion of their supplies from this plant. District lumber production remained relatively unchanged from June. Total United States output during the five months ran substantially higher than had been anticipated, resulting in an upward revi sion in official estimates of total production this year from 30 to 32 billion board feet. Anticipated requirements, however, remain at an estimated 37 billion board feet, including 33 billion for consump tion and 4 billion for urgently needed inventory re placement. PRICES The number of whiskey distilleries operating in the district at the end of July totaled 26 as com pared with 31 at the end of June. No substantial change in production is anticipated as a result of the revisions in grain allocations which were made early in August. Under the new directive, grain allocations in August are on a basis of mashing capacity of a company for a three-day period, based on an average of the five highest consecutive mash ing days since January 1, 1945. A minimum of 6,000 bushels for any one company is provided. Total United States production in the fiscal year ending June 30 amounted to 147.5 million gallons as compared with 41.6 million in 1945 and a peak output of 223.7 million gallons in 1936. Approxi mately 40 per cent of the nation’s output normally is accounted for by district distilleries. Meat packing operations increased sharply in July as a flood of livestock arrived at district stock yards. Temporary suspension of price ceilings at the end of June resulted in a large increase in the marketing of livestock through normal channels. The number of animals slaughtered under Federal inspection at St. Louis in July was 41 per cent higher than in June and was the largest since last December. Slaughter of cattle increased 56 per cent while the number of hogs and calves killed in creased 70 per cent and 8 per cent, respectively. Mining and Oil— Total district coal production in creased 2 per cent in July and amounted to 15.6 milliQn tons as compared with 15.4 million tons in June and 14.4 million tons in July, 1945. The in crease was substantially greater than that in the nation as a whole. Preliminary estimates indicate DEBITS TO DEPOSIT ACCOUNTS C O ST O F L IV IN G Bureau of L abor Statistics July 15 (1935-39 — 100) 1946 United States.... 141.0 St. L ou is........ 139.5 M emphis ...... * * N ot available. June 15 1946 July 15 1945 133.3 131.2 134.5 129.4 126.9 * July 15, ’ 46 Comp, with June 15, ’46 July 15, ’ 45 + + 5.8% 6.3 + + 9.0% 9.9 COST OF FO O D Bureau of L abor Statistics July 15 (1935-39 — 100) 1946 U . S. (51 cities) St. L ou is........ L ittle R ock.... Louisville ...... Memphis ........ 165.7 169.7 159.3 155.2 174.6 June 15 1946 July 15 1945 145.6 147.4 139.1 135.6 153.6 141.7 142.9 141.0 134.3 150.7 July 15, ’ 46 Comp, with June 15, *46 July 15, ’45 + 1 3 .8 % + 1 5 .1 + 1 4 .5 + 1 4 .5 + 1 3 .7 + 1 6 .9 % + 1 8 .8 + 1 3 .0 + 1 5 .6 + 15.9 W H O L E S A L E P R I C E S IN T H E U N I T E D S T A T E S Bureau of L a b or Statistics July, ’46 Comp, with July, ’ 45 (1926 z=100) July, ’ 46 June, ’46 July, ’ 45 June, ’46 A ll C om m odities........ Farm Products^.... Foods ................. Other ..................... 124.3 157.0 140.2 108.8 112.9 140.1 112.9 105.6 105.9 129.0 106.9 99.7 + 10.1% + 12.1 + 2 4 .2 + 3.0 + 1 7 .4 % + 2 1 .7 + 3 1 .2 + 9.1 (I n thousands of dollars) July, 1946 June, 1946 July, 1945 July,’ 46 com p, with June, ’46 July, '45 13,238 $ 10,167 +15% El Dorado, A rk ......... $ 15,249 $ Fort Smith, A rk ......... 30,610 39,303 23,116 — 22 Helena, A rk ................ 4,363 4,525 5,003 — 4 Little R ock, A rk ....... 93,179 90,787 84,521 4 - 3 Pine Bluff, A rk ......... 18,099 19,007 14,848 — 5 Texarkana, A rk.-T ex. 8,722 8,336 8,354 + 5 Alton, 111. ................... 18,211 19,051 15,524 — 4 E. St. L .*N a t.S .Y .,Ill. 87,363 62,724 70,708 + 3 9 Quincy, 111................... 20,736 21,634 16,942 — 4 85,181 76,045 91,445 + 1 2 Evansville, Ind. ........ Louisville, K y ............ 398,948 404,461 384,769 — 1 23,071 20,268 18,641 + 1 4 Owensboro, K y ........... Paducah, K y ............... 11,464 12,289 8,038 — 7 Greenville, M iss.......... 12,925 12,406 7,306 + 4 Cape Girardeau, M o... 8,353 7,735 5,311 + 8 Hannibal, M o .............. 6,359 5,875 5,184 + 8 Jefferson City, M o ..... 42,575 29,129 33,963 + 4 6 + 5 St. Louis, M o ............. 1,261,606 1,202,051 1,030,392 Sedalia, M o.................. 8,709 8,327 5,945 + 5 Springfield, M o ........... 52,759 45,952 35,421 + 1 5 Jackson, Tenn............. 13,095 12,611 8,849 + 4 Memphis, T enn........... 361,632 323,178 233,105 + 1 2 Totals .......................2,583,209 2,438,932 2,117,552 + 6 4 -5 0 % -j-32 — 13 4-10 +22 4 -4 +17 +24 +22 — 7 + 4 +24 +43 +77 +57 +23 +25 +22 +46 +49 +48 +55 +22 Page 9 RETAIL TRADE United States output in July totaled 50.8 million tons as compared with 50.7 million tons in June. D E PA R TM E N T STORES Stocks on N et Sales Hand July, 1946 com pared with June, July, 1946 1945 Stock Turnover 7 mos. 1946 July 31, 1946 to same com p, with Jan. 1, to July 31, period July 31, 1945 1945 1946 1945 Ft. Smith, A rk.... Little R ock, A rk.. Quincy, 111............. ..— 13% + 8% +20% 2.96 +30% 2.46 6 +25 +23 3.38 +27 3.04 ..— 14 +26 +25 + 19 3.09 2.83 7 +32 +23 2.37 2.04 + 11 Louisville, K y. ..— 18 +32 +27 +34 3.68 3.50 ..— 14 +34 +29 +29 2.99 2.75 ..— 14 +33 +29 +29 2.99 2.75 ..— 9 +47 +41 ,— 9 +32 3.28 +38 + io 2.40 Memphis, Tenn. ..— 9 +31 +28 +26 3.32 3.07 7 +35 +37 +27 3.14 2.72 ..— 12 +32 +28 +28 3.15 2.88 *E1 Dorado, Fayetteville, Pine B luff, A r k .; A lton, Harrisburg, Jacksonville, M t. V ernon, 111.; N ew A lbany, "Vincennes, In d .; Danville, H opkinsville, M ayfield, Paducah, K y . ; Chillicothe, M o .; and Jackson, Tenn. iln clu d es St. Louis, M o., East St. Louis and Belleville, 111. Trading d ays: July, 1946— 2 6 ; June, 1946— 2 5 ; July, 1945— 25. O utstanding orders of reporting stores at the end of July, 1946, were 63 per cent greater than on the corresponding date a year ago. Percentage of accounts and notes receivable outstanding July 1, 1946, collected during July, by cities: .... Instalment E xcl. Instal. Accounts Accounts Instalm ent E xcl. Instal. A ccoun ts A ccoun ts 61% 64 59 59 Ft. Smith.................% Little R ock.... 31 Louisville ...... 40 Memphis ...... 42 .... 73% 69 59 65 Q uincy ............... 30% St. Louis ........... 41 Other cities.... 37 8th F .R . Dis. 40 I N D E X E S O F D E P A R T M E N T S T O R E S A L E S TA ON CK DS 8th Federal Reserve District July, June, M ay, July, 1946 1946 1946 1945 .. 234 .. 300 .. 240 231 2D aily A verage 1935-39 = 100. 3End o f M onth A verage 1935-39 : 274 305 222 222 272 277 211 211 185 225 181 174 : 100. S P E C IA L T Y STO R ES Stocks on Hand N et Sales July, 1946 com pared with June, July, 1946 1945 M en’s Furnishings....— 3 3 % B oots and Shoes........— 24 +25% +16 Stock Turnover 7 mos. 1946 July 31, 1946 to same com p, with Jan. 1 to period July 31, July 31, 1945 1945 1946 1945 +35% +23 + 1% +65 3.88 6.33 2.09 6.13 Percentage of accounts and notes receivable outstanding July 1, 1946, collected during J u ly : B oots and Shoes...........................53% M en ’s Furnishings....................... 63% Trading d a ys: July, 1946— 2 6 ; June, 1946— 2 5 ; July, 1945— 25. R E T A IL F U R N IT U R E STO RES N et Sales Inventories July, 1946 July 31, 1946 compared with compared with June 30, July 31, June, July, 1946 1945 1946 1945 Ratio of Collections July, July, 1945 1946 61% 46% +46% St. Louis A rea1..— 7% +46% + 7% 48 +46 64 St. Louis ........— 6 +47 + 7 26 27 +48 +23 + 16 Louisville A rea2..— 16 24 +50 25 +32 Louisville ........— 14 + 15 30 +61 35 +12 +49 M emphis .............. -032 35 +64 +48 L ittle R ock ........+ 8 * * + S Springfield ..........+ 9 +60 37 + 5 6 45 8th Dist. T otal3..— 5 +44 -fci? *N ot shown separately due to insufficient coverage, but included in Eighth D istrict totals. ^Includes St. Louis, M issou ri; E ast St. Louis and A lton, Illinois. 2Includes Louisville, K entucky, and N ew Albany, Indiana. 3In addition to above cities, includes stores in Blytheville, F ort Smith and Pine Bluff, A rkansas; Henderson, H opkinsville, Owensboro, K en tu ck y ; Greenville, Greenwood, M ississippi; Hannibal, Missouri, and Evansville, Indiana. PERCENTAGE D IS T R IB U T IO N O F F U R N IT U R E SALE S July, ’ 46 June, ’46 July, *45 Cash Sales ........................................................ 24% Credit Sales ...................................................... 76 Total Sales ................................................... 100 Page 10 25% 75 100 21% 79 100 Crude oil production increased slightly in July and was 4 per cent larger than a year ago. Daily average output from district fields amounted to 339,000 barrels in July as compared with 338,000 barrels in June and 326,000 barrels in July, 1945. The number of completions rose during the month but the ratio of producing wells to the total com pleted was slightly less than in June. District lead mine output continued at the low level of earlier months, although a slight increase over June production is indicated by preliminary estimates. Total demand for lead is considerably in excess of available supplies. August requests to the Office of Metals Reserve amounted to 67,000 tons while only about 17,000 tons were available for distribution. Under the Government's stockpile program, 25 per cent of domestic output and all imports are taken by the Government. Construction— The value of building permits awarded in the five major district cities in July totaled $6.9 million as compared with $6.4 million in June. However, the increase in July was due to a sharp gain in the value of permits in Louisville and Memphis; all other cities showed a decline. In general, the value of residential permits author ized increased in July while additional curbs on commercial construction produced a sharp drop in authorizations in that class. In St. Louis, permits were issued for residential structures accommodat ing 166 families as compared with 95 families in June. In Little Rock, residential permits rose more than 67 per cent in value while in Memphis the increase was about 20 per cent. Transportation— The number of freight cars in terchanged among railroads at the St. Louis termi nal in July was virtually the same as in June. In the first nine days of August, however, a greater than seasonal increase occurred. Most carriers are experiencing considerable difficulty in lowering the turn-around time on practically all types of freight cars, a factor which has led to a general tightening of the car supply. Shortages are developing in many areas in the country which may begin to have a serious effect on the distribution of goods from producers to consumers unless the trend is reversed. On the west coast, lumber shipments, for example, have been sharply curtailed due to the unavailability of freight cars. TRADE The high level of sales during the first half of 1946 was maintained in July with most reporting retail trade lines registering substantial increases in sales volume over the comparable month a year ago. While the dollar volume of sales for July was below June, the decline was less than seasonal and was due mostly to decreases in nondurable lines. In creasing prices, recently rising at an accelerated rate, are accounting for a greater portion of dollar sales volume. The lapse of price control apparently had little effect on the volume of consumer buying, but the trend toward discriminatory buying is be coming more evident, with retailers experiencing increasingly stiff resistance to unknown brand mer chandise. Inventories, in terms of dollar value, in creased slightly from the month previous but con tinue unbalanced and below their normal relation to sales volume. Reporting department store dollar sales in July, reflecting the usual seasonal trend, declined 12 per cent below the previous month but were 32 per cent greater than in July, 1945. For the first seven months of 1946 sales volume has averaged 28 per cent above the comparable period in 1945. Prelim inary reports for the first and second weeks of Au gust indicate the year-to-date gain will be main tained and may be exceeded slightly during the month. Inventories at reporting department stores were up 6 per cent for the month and were 28 per cent greater than at the end of July, 1945, but continue unbalanced. Growing consumer re sistance to substitute merchandise readily sold during the war years, plus rising production in many lines, have resulted in some “ clearance sales” in an effort to dispose of such goods. Outstand ing orders of reporting department stores, still in large volume, are returning to more normal levels in relation to sales. Record production of women’s and men's wear ing apparel is beginning to filter to retail outlets, relieving the shortages that developed in some lines of merchandise. The better quality of goods recently appearing in many lines has led to more selective buying. Dollar sales volume at women’s apparel stores in July, while 13 per cent less than in June, 1946, was 17 per cent greater than for July, 1945. At men’s wear stores July sales volume was 33 per cent under the previous month and 25 per cent more than for the comparable month last year. Declines from June to July at both types of store reflected seasonal factors. Inventories at women’s apparel stores, up 10 per cent from the end of the month previous, were 16 per cent more than for the same date last year, while at men’s wear stores in ventories were 10 per cent and one per cent larger than at the end of the previous month and the same month last year. WHOLESALING Lines of Commodities N et Sales Stocks July 31, 1946 July, 1946 Data furnished by Bureau of Census, com pared with com pared with U . S. Dept, o f Com m erce.* June, ’46 July, ’ 45 July 31, 1945 A utom otive Supplies ........................ .....+ 6% Drugs and Chemicals........................ .....+ 6 D ry Goods ............................................ .....+ 3 Electrical Supplies ............................. .... 4 - 30 Furniture .............................................. Groceries ................................................ ..... + 4 .....+ 3 Plum bing Supplies ............................. .... + 40 T obacco and its P rodu cts.................. .... 4- 8 Miscellaneous ........................................ .... 4- 13 Total all lines**................................... .....+ s * Preliminary. ' **Includes certain lines not listed above. 4 - 53% 4- 9 4 - 64 4-104 + 82 -b 27 4 - 54 + 70 + 48 + 37 4- 45 +31% 4-77 4-35 +53 +51 +61 CONSTRUCTION B U IL D IN G P E R M IT S N ew Construction (C ost in thousands) Cost Num ber 1946 1945 Evansville ... ... 40 Little R ock ... .. 133 Louisville ..... ... 248 ... 580 34 44 67 412 150 July Totals... ...1,197 June Totals... ...1,177 707 609 1946 $ 50 659 928 3,104 1,277 6,018 5,057 1945 Repairs, etc. 43 66 270 807 518 152 156 73 215 318 194 196 46 183 243 1,704 1,272 914 960 862 860 $ Cost N um ber 1946 1945 1945 1946 $ $ 45 127 65 124 545 117 49 18 97 412 693 735 906 1,388 BANKING C H A N G E S IN P R IN C IP A L A S S E T S A N D L I A B I L I T I E S F E D E R A L R E S E R V E B A N K O F ST. L O U IS Change from (I n thousands o f dollars) A u g. 14, 1946 Industrial advances under Sec. 13b.......... $................. Other advances and rediscounts.............. 8,210 U . S. securities................................................ 1,087,201 July 17, 1946 A u g. 15, 1945 ............ 4,535 17,210 ............ — 440 + 74,758 + 1,095,411 4 - 12,675 4 - 74,318 Total reserves .................................................. 608,546 — T otal deposits ................................................ 635,847 + F. R . notes in circulation............................ 1,061,980 -4- 1,714 + 20,283 51 — 7,588 4,834 4 - 67,327 Total earning assets.................................. Industrial commitments under Sec. 13b.. 4,040 + 440 P R IN C IP A L R E S O U R C E A N D L I A B I L I T Y O F R E P O R T IN G M E M B E R B A N K S (I n thousands of dollars) 4,040 IT E M S Change from A u g . 15, July 17, 1945 1946 A u g. 14, 1946 T otal loans and investments....................... $1,933,452 Commercial, industrial, and agricultural . 318,746 10,942 Loans to brokers and dealers in securitiesi Other loans to purchase and carry 65,636 87,520 1,283 Loans to banks............................................... 126,514 610,641 22,362 162,032 Certificates o f indebtedness......................... 200,865 796,030 366 Obligations guaranteed b y U . S. G ovt... 141,156 Other securities ............................................. T otal investments ....................................., 1,322,811 108,133 Balances with dom estic banks............. ..... Demand deposits— adjusted** ..................., 1,118,205 368,895 215,082 U . S. Government deposits......................... 547,123 4,000 + — 17,450 — 47*362 + 16,584 — 921 + + 539 3,226 367 6,036 25,831 9,438 30,172 — 4,157 — — 14,476 - 0 — 3,914 — 43,281 — 10,999 4 - 17,018 2,206 + 21,395 — 26,596 — 4,065 + 12,436 + 20,050 — 1,166 + 37,935 + 1 4 8 ,4 0 8 — 36,463 — 101,375 — 131,859 + 65,134 — 275 + 9,068 — 195,770 — 13,076 + 30,940 + 49,789 — 119,945 — 45,268 — 4,600 + + + + + 76,627 2,526 ^Includes open market paper. **O ther than interbank and Governm ent deposits, less cash items on hand, or in process o f collection. A bov e figures are for selected m ember banks in St. L ou is, Louisville, Memphis, Little R o ck and Evansville. Page 11 Although dollar sales volume in July was 5 per cent under the previous month, furniture stores reg istered an increase of 44 per cent over the same month last year, the largest increase of any report ing retail line. Dollar values of inventories were up 10 per cent and 56 per cent over the end of June, 1946, and July, 1945, respectively. Disparity in sup ply of different lines of merchandise, however, is also marked at furniture stores. Bedroom and din ing-room furniture are in particularly short supply with prospects the shortage will continue for quite some time. The same holds true for certain other items; for example, the production of major elec trical appliances as yet inadequate to meet demand. BANKING AND FINANCE Banking changes at Eighth District reporting banks during the last four weeks were relatively unimportant, the most significant being another de cline of $39 million in Government security hold ings. The Treasury redeemed for cash $1,250 mil lion of the $2,470 million issue of certificates of indebtedness maturing August 1. Treasury cer tificates held by Eighth District reporting banks declined $10.5 million for the week ending August 7 and $30 million for the last four weeks. Treas ury notes were off slightly and bond holdings de creased about $14 million continuing the decline which began about May 1. Bond holdings of report ing banks increased during the first quarter of 1946 reaching a peak for the year to date of $839 million on March 27, and then declined to a total of $796 million on August 14. Most of the decrease in bond holdings has been at St. Louis reporting banks. An increase in loans and in other securities par tially offset the decline in Government security holdings. Commercial loans increased $17 mil lion, St. Louis reporting banks accounting for most of the increase, while the Memphis banks registered a slight decrease. Real estate loans continued to increase, reflecting primarily gains at the St. Louis and Memphis reporting banks. All other loans, which are primarily consumer loans, increased $6 million. Total deposits of Eighth District reporting banks decreased during the last four weeks, most of the decrease being in bank deposits of individuals and business firms and in War Loan accounts. De mand deposits of individuals and business firms ihcreased $17 million, interbank deposits dropped $27 million, and Government deposits decreased an other $21 million, making a total decline in the lat ter of $283 million for the year to date. Time dePage 12 posits continued to increase although the rate of increase is diminishing slightly. AGRICULTURE General crop conditions over the nation have continued favorable with most production estimates being revised upward. Aggregate crop production in 1946 promises to exceed that of any previous year, according to the August 1 estimate by the United States Department of Agriculture. The 1946 aggregate crop is estimated at 6 per cent above 1945 and 3 per cent above the previous high mark set in 1942. An all-time record wheat crop of 1,160 million bushels seems assured and a 3,442 million bushel corn crop is in prospect. The 1946 oat crop now appears less than 50 million bushels under the bumper crop of last year. The prospective 2,163 mil lion pound tobacco crop is also a new record, exceed ing last year's harvest by 8 per cent, and the esti mated 69 million bushel rice crop is only 2 per cent under that of 1945. The United States cotton crop will be light; indicated production of 9,290 thousand bales being only 3 per cent above the poor harvest of 1945. Eighth District crop conditions continued to improve throughout July and conditions generally have been favorable during the early part of August. The indicated production of cotton is up slightly in all district states except Mississippi, and as of August 1 is 3,380 thousand bales compared to the very low 1945 production of 3,248 thousand bales, Mississippi cotton production is estimated at 1,250 thousand bales for 1946 as compared to a 1945 out'put of 1,560 thousand bales. Planted acreage of cotton is again low and the condition of the crop varies widely throughout the district. The indicated corn crop for district states is 1,170 million bushels, which is 21 per cent above last year. Contrary to the national trend, the 1946 wheat crop of 85 million bushels is 11 per cent less than the 1945 harvest. District oats production, on the other hand, is expected to be 17 per cent above last year with an estimated production of 324 million bushels. The indicated Arkansas rice crop of 15 million bushels is 5 per cent above last year's record out put. The district tobacco crop estimated at 621 million pounds is slightly above last year's produc tion. In general, the Eighth Federal Reserve District states, like the nation as a whole, are headed toward a bumper year of agricultural production and the progress of most crops is far enough along at this time so that there is little likelihood of any material downward adjustment of the present estimates.
@FedFRASER