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Page
BUSINESS AND FINANCIAL DEVELOPMENTS
Business Expansion Continues
2
Rate of Monetary Expansion Declines
3
CHANGES IN THE STRU C TU RE
OF AGRICULTURE
T h e num ber o f farm s and the farm labor fo rce declined substantially fro m
193 5 to 1 9 5 9 , w ith the h ig h est rate o f d eclin e occu rrin g in recent years.
Since
1 9 3 5 , the average size o f farm alm ost doubled.
E ig h th D istrict states gen erally fo llo w ed national trends.
D ev elop m en ts in
T h e changes are
traced to tech n olog ical advances w hich have com e into play on a w ider scale
and w ith a greater im pact in th e 1 9 5 0 ’s.
DISTRICT DATA
VOL.. 4 3
• N o. 9
• S E P T E M B E R *61
12
BUSINESS AND FINANCIAL DEVELOPMENTS
Business Expansion Continues
T h e UNITED STATES ECONOMY continued its
fifth post-war expansion through July and August. The
vigor of the recovery has been comparable to the re
covery of 1958 and somewhat greater than that of
1954. Major indicators of business activity show con
tinued vigorous expansion in the most recent periods
for which data are available. While the gains have
been on a wide scale, unemployment has continued at
a high rate, remaining near its recession peak.
assemblies were curtailed markedly in early August,
much of the decline was attributable to model
changeovers.
Construction
Construction expenditures, seasonally adjusted, in
creased slightly from June to July and rose further in
August (Chart 2). Increased expenditures on public
Chart 2
Outlays for New Construction
Production
Industrial output reached new high ground as gains
continued widespread among major areas of the econ
omy (Chart 1). Both durable and nondurable goods
output has risen at a brisk rate. Gains have been es
pecially sharp among producers of basic metals, in
cluding iron and steel, and among producers of
construction materials.
The rise in production probably continued through
August. New orders received by durable goods manu
facturers in July were 2 per cent above the June level.
The rise was especially strong in aircraft and elec
tronics, involving in large part increased defense pro
curement. Steel output in August was up somewhat
more than seasonally from July. Though automobile
Latest data plotted: August preliminary
Source: Department of Commerce
Chart 1
Industrial Production
projects accounted for a major part of the expansion,
though expenditures on private residential construc
tion rose also. Expenditures on public highways and
roads showed an 8 per cent increase from June to
August; public expenditures on residential construc
tion increased modestly over the period.
Personal Incom e
Reflecting increases in productive activity and spe
cial dividend payments on GI insurance, personal in
come rose to a new record level in July. Seasonally
adjusted personal income in July was 5 per cent higher
than during the prerecession peak month. On the
basis of continued improvements in production and
employment, wages and salaries probably rose further
in August.
Page 2
Sales
Retail sales have not expanded in pace with improvements in income. Personal income rose 4 per
cent from February to July while retail sales expand
ed only 2 per cent during the period. In July, sales at
retail outlets declined 1 per cent from the June level,
reflecting a slowdown in sales of automobile dealers.
Sales at weekly reporting department stores through
the four-week period ending August 26 were some
what stronger than during the corresponding period
in 1960.
roll data from the monthly survey of employers (see
Chart 3). The rise in nonfarm payroll employment
C h a rt 3
Nonfarm Payroll Employment
Troughs=100
Troughs—100
S e a so n a lly Adjusted
Employment and Unemployment
There has been a great deal of concern over the
fact that the unemployment rate, the proportion of
unemployed in the civilian labor force, has failed to
respond to improvements in general business. The
unemployment rate remained near 7 per cent from
mid-December of 1960 to mid-August 1961, though
business activity began to improve in February of this
year. The “stickiness” of the unemployment rate does
not mean that the recovery and expansion have not
had an impact on the labor market. From midFebruary to mid-July nonfarm employment (seasonally
adjusted) as measured by the Bureau of the Census’
monthly household survey increased slightly. An even
more dramatic rise in employment is reflected in pay
M onths from Trough
Source: Bureau of Labor Statistics
from the trough (February 1961) was more rapid than
from the troughs of the 1957-1958 and 1953-1954 re
cessions. By July 1961 gains in nonfarm payroll em
ployment had more than offset the peak-to-trough
decline, while by the fifth month of the two previous
recoveries employment had not regained prerecession
levels.
Rate of Monetary Expansion Declines
Interest Rates
Yields on U.S. Government Securities
Per C e n t
I NTEREST
RATES have worked up moderately in
recent weeks. Yields on three-month Treasury bills,
which had fluctuated around 2.30 per cent from mid1960 through early August, averaged 2.43 per cent in
the week ended August 25 (Chart 1). In this same week
rates on long-term Government bonds, which gen
erally had fluctuated within the 3.80 per cent to 3.90
per cent range, averaged 4.01 per cent. Yields on AAA
corporate bonds have moved up less rapidly, how
ever, while rates on state and local bonds have re
mained about unchanged on balance. With the rise
in rates, long-term Government bonds were earning a
higher yield than at any other time in the past ten
years with the exception of the period from roughly
mid-1959 to mid-1960. Rates on Treasury bills, how
ever, remained far below the 3.58 per cent peak of
> \ 'l
P er C e n t
Weekly Averages of Daily Figures
1 1 I I ■■
r !
|. - r ,
11
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1 1 '
II
I I " 1"
a
A
Long -Term Bonds
'
\A
,
i V
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-
-
-J- Latest
7T
l
—^
^
1
3-5 Y eai• Bonds
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3-Month Treasury Bills
1
data plotted: Week Ending August 25, 1961
1
1
I
[.II
1960
1 l_J--- l— L_J--- 1— L-J----- l —I— 1 i l J (
1961
October 1957 and the 4.49 per cent peak reached in
November 1959.
Page 3
Bank Reserves
Total reserves of member banks, adjusted for sea
sonal variation, rose in August after declining slightly
in July. Reserves available to support an expansion
in private deposits showed little net change during
July and August, while that portion of total reserves
supporting U. S. Government deposits rose. Since
late 1960, reserves have fluctuated around $19.0 billion.
Excess reserves decreased slightly in July to $584
million and remained near this level during August
(Chart 2). Member bank borrowing from the FedC h o rt 2
Excess Reserves & Borrowings of Member Banks
1.0
1.0
-A
-
\
....
\
t
1
1
4
.8
S
E xcess Re se rves
.6
A
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V
after expanding at an annual rate of roughly 12 pei
cent in July (Chart 3). The July increase in bank
credit was largely in investments, reflecting primarily
the Treasury’s financing operation at the end of July.
Investments were down slightly in August. Total
bank loans were up only fractionally in both July and
August.
Bank loans have increased at an estimated annual
rate of about 1 per cent thus far in the recovery, Feb
ruary through August. This compares with an in
crease of almost 3 per cent in the first six months of
the 1958-59 recovery. Bank loans began to expand
sharply after the eighth month of recovery in the
1958-59 upturn. Following the August 1954 trough,
bank loans rose sharply throughout the recovery period.
Money Supply
Active money supply (demand deposits adjusted
plus currency outside banks) declined at an annual
rate of 1.1 per cent during July and the first half of
August (Chart 4). From the second half of March
\
\
-
V /
C hart 4
Money Supply
v
Sem i-M onthly A v e ra g e s of D a ily Figures
%
\
\
Bb o rro w in g s o f
F e d e r a l R e s e rv e B<an ks
\
— 1— 1— 1— 1
1
■1
Billions of Dollars
1
1
1
1
Se a so n a lly Adjusted
Billions of Dollars
/
- J ___1__ 1___L..J___ __ 1__ 1___1___L _ 1__
1960
1961
Sourcei Federal Reserve B o a rd
Latest d ata plotted: A u g u s t p re lim in a ry
eral Reserve declined to an average of only $51 million
in July, but increased to roughly $70 million in August.
Bank Credit
Total loans and investments of commercial banks,
seasonally adjusted, were about unchanged in August
Chart 3
Bank Credit
All Commercial Banks
Billions of Dollars
250
Billions of Dollars
250
Se ason ally Adjusted
-
-
To tal
200
200
-
-
150
150
Lo<ans
-
-
100
100
Invest ments *
50
50
Latest dalra plotted: August es timated
1954
1955
1956
"‘Not adjusted seasonally
Page 4
1957
1958
1959
1960
1961
through the first half of August there was virtually no
change in the active money supply. In the four pre
ceding months (second half of November 1960-second half March 1961) active money expanded at an
annual rate of 4.5 per cent.
Time deposits of commercial banks, which have
been expanding at an annual rate of over 15 per cent
since late 1960, continued to increase at about this
rate during July and the first half of August. Re
flecting the rapid growth in time deposits? the total
money supply, active money plus time deposits, ex
panded at an annual rate of 4.0 per cent in July and
the first half of August. From the second half of
March to the first half of August the total money sup
ply increased at an annual rate of 5.4 per cent. It ex
panded at an annual rate of 9.1 per cent in the pre
ceding four months, however.
about 5.50 per cent. The ratio probably decreased to
less than 5 per cent in September of that year, the
month when stock prices reached their peak.
Chart 6
Yields on Stocks and Bonds
Stock Prices, Corporate Earnings and Dividends
Per Cent
Per Cent
Corporate stock prices, which have been rising for
over a decade, increased at an accelerated rate in
recent months. Standard and Poor’s 500 composite
stock index (1941-43=10) reached 68 in August, up
21 per cent over the last twelve months. During the
past three years the average annual rate of increase in
stock prices has been 14 per cent, and since 1948 the
average annual rate of increase has been 12 per cent
(Chart 5).
Chart 5
Stock Prices*
1941-43 = 10
Monthly A v e ra g e s of D a ily Figures
1941-43=10
The rise in stock prices has continued even though
corporate profits have not shown a vigorous upward
trend in recent years (Chart 7). In 1948 corpoChart
7
Corporate Profits and Dividends
Seasonally Adjusted at Annual Rates
B illio n s of D o lla r s
The upward movement in stock prices has been
much more rapid than the increase in corporate earn
ings or dividends. At August market prices and divi
dend rates, the average dividend-price ratio on com
mon stocks was less than 3 per cent. At the same
time, yields on best quality corporate bonds were
about 4.45 per cent (Chart 6). By contrast, in the
late forties stock yields were about 6 per cent, and
average interest rates on highest-grade corporate
bonds were roughly 2.75 per cent. During the first
half of 1929 the dividend-price ratio on common stock
averaged 3.36 per cent.
In August this year, the rate of corporate earnings
was estimated to be 4.50 per cent of common stock
prices. During the mid-fifties, corporate earnings aver
aged about 8 per cent of stock prices, and in the late
forties they averaged 14 per cent. The average earnings-price ratio in the first six months of 1929 was
B illio n s of D o lla r s
Source: Department of Commerce
rate profits after taxes amounted to $20.7 billion, in
the 1954-56 period they averaged $21.1 billion, and at
the present time they are running at an estimated
$21.3 billion rate. As a per cent of the total value of
goods and services produced in the economy, profits
of corporations, after taxes, decreased from 8 per cent
in 1948 and 1949 to roughly 4 per cent in the first
eight months of 1961.
Page 5
Changes in the Structure of Agriculture
V^HANGES IN THE STRUCTURE of agriculture
in the United States have continued at an accelerated
rate in recent years. In some cases these changes
began a century or more ago. This article considers
particularly changes in number and size of farms
and quantity of farm labor.
In 1959 there were only 3.7 million farms in the
nation, 23 per cent less than in 1954 and the smallest
number for any census year since 1870.
The proportion of the nations labor force engaged
in agriculture has declined in each decade since 1820,
dropping from 72 per cent of the total in that year
to about 8 per cent in 1959.
Owner-operated farms declined in number from
3.2 million in 1935 to 2.1 million in 1959, but rose
from 47 per cent of total farms in 1935 to 57 per cent
in 1959. Farms which were part owned and part
rented increased in absolute. number from 689 thou
sand in 1935 to 810 thousand in 1959, and as a pro
portion rose from 10 per cent to 22 per cent.
Chart 1
Farms and Farm Workers
Millions
in the United States - by Census Years
Per Cent
The declining use of labor in agriculture has been
achieved through technological changes which have
occurred at varying rates throughout the history of
the nation and have been very rapid in recent years.
Num ber of Farms
The number of farms in the nation declined 23 per
cent, from 4.8 million in 1954 to 3.7 million in 1959.
Although 232 thousand of the 1.1 million drop can be
attributed to a change in definition of a farm, even
under the old definition the number was down 18
per cent, a greater decline than had occurred in any
previous 5-year period recorded by the census.
The number of farms in the nation rose from 1.4
million to 5.7 million during the last half of the 19th
century and reached a plateau in excess of 6 million
in the early 1900*5. The total held near this level until
the 1930s, when a “back-to-the-farm” movement in
the early depression years pushed the total up to a
peak of 6.8 million in 1935. A decline has occurred
during each interim census period since that time,
with a greater rate of decline in the fifties than in
earlier years. By 1959 the total was about one-half
the level of a quarter century earlier (Chart 1).
On the basis of tenure the greatest decline in num
ber of farms since 1935 has been in the tenantoperated group. The number of tenant-operated farms
declined from 2.9 million in 1935 to 0.8 million in
1959, a decline of about 74 per cent. Tenant-operated
farms declined from 42 per cent of total farms in
1935 to 20 per cent in 1959 (Table I).
Page 6
Source: Number of farms: Census of Agriculture
Farm Workers: Department of Labor
Table I
Farm Operators, by Tenure
{in thousands)
Year
Total
Full
Owners
1959
1954
1950
1945
1940
1935
3,704
4,782
5,382
5,859
6,097
6,812
2,116
2,737
3,090
3,301
3,084
3,210
Part
Owners
810
857
825
661
615
689
Data may not add to totals due to rounding.
Source: Census of Agriculture.
Tenants
758
1,168
1,444
1,858
2,361
2,865
Managers
21
21
24
39
36
48
Tenure Groups
Total land in farms rose about 10 per cent in the
period 1935 to 1954. Greatest increases occurred in
acres operated by part owners arid managers. Acreage
operated by full owners increased slightly, while that
operated by tenants declined substantially (Table II).
Table II
Land in Farms, by Tenure
Definitions
(millions of acres)
Year
Total1
1959
1954
1950
1945
1940
1935
1,120
1,160
1,159
1,142
1,061
1,055
n.a.
Full
Owners
n.a.
397
419
412
382
391
Part
Owners
Tenants
Managers
n.a.
472
422
371
300
2 66
n.a.
190
212
252
312
337
n.a.
100
105
106
67
61
Not available.
i Land planted to principal crops declined about 10 per cent from 1935 to
1959.
Source: Census of Agriculture.
As a proportion of the total, acreage operated by full
owners declined from 37 per cent in 1935 to 34 per
cent in 1954. Tenant-operated acreage dropped from
32 to 16 per cent, while acreage operated by part
owners rose from 25 to 41 per cent and that farmed
by managers rose from 6 to 9 per cent.
Total rented acres declined moderately from 471
million in 1935 to about 395 million in 1954. Rented
acres operated by tenants dropped from 337 million
to 190 million, a decline of 44 per cent. This major
decline was partially offset by the increase in acres
rented by part owners, which rose from 134 million to
about 205 million. Land operated by owners, includ
ing that owned by those who rent additional land,
rose from 523 million to about 665 million acres.
Size of Farms
The average size of farm in the United States almost
doubled between 1935 and 1959, increasing from 155
to 302 acres. Size of farms has trended upward since
1880, but the rate of increase has accelerated in recent
years. During the entire 55 years from 1880 to 1935
the average size of farm increased 16 per cent, or an
average of about 1Vz per cent for each 5-year period,
while the rate of increase was about 12 per cent for
each 5-year period from 1935 through 1954 and 25
per cent in the period 1954 to 1959.
While farms in all tenure groups increased in aver
age size in the 1935-1954 period, those operated by
tenants and part owners increased more than owneroperated farms. Tenant farms increased from an
average of 118 to 166 acres or 41 per cent, the same
rate of increase as that of part-owner farms which
rose from an average 386 to 544 acres. Owneroperated farms increased only 19 per cent, from an
average of 122 to 145 acres during the period
(Table III, next page).
Farm
F o r the 1959 censu s, p laces o f less th an 10 acres
w ere cou nted as farm s if estim ated sales o f agricu ltu ral
products for th e y e ar am ou nted to at le a st $250.
P laces of 10 or m ore acres w ere cou nted as farm s if
th e estim ated sales o f ag ricu ltu ral p rod ucts fo r the
y ear am ounted to a t least $50. P lace s having less than
th e $50 o r $250 m inim um estim ated sales w ere also
counted as farm s if th ey cou ld n orm ally b e exp ected
to produce ag ricu ltu ral pro d u cts in sufficient q u an tity
to m eet the requ irem en ts o f th e definition. T h e w ord
p lace w as defined to in clu d e all land on w hich
agricu ltu ral operations w ere con d u cted at any tim e in
1959 under the co n tro l o r supervision o f one person or
partnership.
In the 1950 and 1954 cen su ses, p laces o f 3 o r m ore
acres w ere cou nted as farm s if th e annual v alu e of
agricu ltu ral p rod u cts, exclu siv e o f hom e garden p rod
ucts, am ounted to $1 5 0 or m ore. P laces o f less than
3 acres w ere cou n ted as farm s only if th e annual
sales of agricu ltu ral p ro d u cts am ou nted to $15 0 or
m ore.
F o r the 1945 and e a rlie r cen su ses, th e d efinition of
a farm was som ew hat m ore inclu sive.
Farm Operator
A person w ho o p erates a farm , e ith e r d oing the
w ork him self or d irectly supervising th e w ork, is
classified as a farm o p erator. H e m ay b e th e ow ner,
a m em ber o f th e ow ner’s hou sehold , a h ired m anager,
o r a tenant, ren ter, or sharecrop p er. In the case o f a
partnership, only one p artn er is cou n ted as an op
erator. T h e n u m ber o f farm o p erators is con sid ered to
b e the sam e as th e n u m b er of farm s.
Farm Operator Classes
T h e various classifications o f ten u re, as used in this
article, are:
a. F u ll Owners—O p e rate only land w hich they own.
b. P a rt O w ners—o p e rate lan d w h ich they own and
also land ren ted from o thers.
c. T en an ts—do not ow n any o f th e land w hich th ey
operate.
d. M anag ers—o p erate lan d fo r others and are paid
a w age or salary fo r th eir services.
Page 7
N um ber and Size of Farms in Eighth
District States
Table III
Average Size of Farm, by Tenure
(acres)
Year
Total
Full
Owners
1959
302
n.a.
1954
242
1950
215
136
1945
195
125
1940
174
124
1935
155
122
145
Part
Owners
Tenants
Managers
n.a.
n.a.
n.a.
544
166
4,786
512
147
4,473
562
135
2,736
488
132
1,830
386
118
1.261
n.a.—Not available.
Source:Census of Agriculture.
Farm Labor
Changes in agricultural structure in the district
states have paralleled the trends in the nation. The
number of farms in the combined seven states in the
Eighth Federal Reserve District1 declined 23 per cent
from 1954 to 1959, the same percentage as in the
nation. Over a longer period, the downtrend in these
states and the nation was also similar. Number of
farms declined 13 per cent in the district states from
1950 to 1954, compared to 11 per cent in the nation
and declines of 5 per cent and 8 per cent, respectively,
occurred in the district states and the nation during
the 1945-50 period (Table V).
In 1959 there were less than 6 million agricultural
workers, or 10 per cent less than in 1954. From
a peak of more than 11 million workers in 1910, the
number gradually declined to about 10 million in
1935, after which the rate of decline increased
(Chart 1).
While the number of farm workers declined 42
per cent from 1935 to 1959, the total civilian labor
force increased 31 per cent. In 1935 almost 20 per
cent of the labor force was engaged in agriculture.
In 1959 about 8 per cent was similarly employed.
In addition to the substantial decline in the number
of farm workers, relatively more farmers work off
their farms than formerly. While some of this em
ployment is work on other farms, it is believed that
the greater part is nonfarm work. More than 30 per
cent of all farm operators worked off their farms
100 days or more in 1959. In comparison, 28 per cent
worked off their farms a similar number of days in
1954 and only 23 per cent in 1949 (Table IV).
Table IV
Farm Operators Working Off Their Farms
100 days or more
Year
Per Cent of
Total Farm
Operators
1959 ......................................................... 3 0 %
1954 ......................................................... 28
1949 ......................................................... 23
Table V
Number of Farms
1935 to 1959
Per Cent Change From
1954 to
1959*
Arkansas
...........
Illinois ..............
Indiana
Mississippi
1945 to
1950
1940 to
1945
1935 to
1940
— 35%
— 20%
—
8%
—
8%
— 14%
— 12
— 10
—
4
—
4
—
—
8
—
5
—
5
—
8
— 11
—
8
—
6
—
9
............. — 17
Kentucky
1950 to
1954
...........
— 22
........
8
— 36
— 14
—
5
— 9
—
7
Missouri ............. — 16
— 12
—
5
—
5
—
8
Tennessee
.......... — 22
— 12
—
1
—
5
— 10
Eighth District States — 23
— 13
—
5
—
6
—
United Sta te s......
— 11
—
8
—
4
— 11
— 23
9
Computed from Census of Agriculture data.
* Changes from 1954 to 1959 using 1954 definition: Arkansas—28% , Illinois
— 10%, Indiana— 13% , Kentucky— 16%, Mississippi—31% , Missouri—
12%, Tennessee— 17% , Eighth District states— 18%, and United States—
18% .
The trend in number of farms was not uniform in
the several Eighth District states in the 1954-59
period. The number of farm units declined less
rapidly in Missouri, Illinois, and Indiana than in
other district states. The decreases in Illinois, Indiana,
and Missouri were 12,17, and 16 per cent respectively.
Substantially greater declines occurred in the four
southern states where farming operations differ great
ly from those in the major grain and livestock area to
the north. Kentucky and Tennessee each had a de
crease of 22 per cent, while in Arkansas and Missis
sippi the declines were about. 35 per cent. The high
rate of change in the southern states can probably
1944 ......................................................... 18
1939 ..................................................... .... 15
1934 ..........................................................11
Source:
1959 Census of Agriculture—Preliminary.
Page 8
1 Arkansas, Illinois, Indiana, Kentucky, Mississippi, Missouri,
and Tennessee. Only portions of each of these states, with
the exception of Arkansas, are included in the Eighth Federal
Reserve District.
be explained by the wide disparity between farm and
nonfarm income in the area plus the rapid transition
from the old technology and the small cropper system
farms to highly mechanized, consolidated operations.
Tenure Groups in the District States
In the seven district states, as in the nation, the
trend in farm tenure has been away from tenancy to
part owners or full owners. Part owners increased
both in absolute numbers and in proportion to the
total from 1935 to 1959. Full owners were a sub
stantially larger portion of the total in 1959 than in
1935 but have declined in absolute numbers each
census year since 1945.
The per cent of farms operated by tenants in the
district states has declined since 1935. Throughout
the period, however, the per cent of farms operated by
tenants was greater in the seven states than in the
nation. Twenty-three per cent of all farms in these
states were operated by tenants in 1959 compared to
20 per cent for the nation. In 1935, 48 per cent of
farms in the district states were operated by tenants
compared to 42 per cent for the nation (Table VI).
Table VI
Per Cent of Farms Operated by Tenure
1959 and 1935
Full Owners Part Owners
1959
Arkansas
................. 5 9 %
1935
34%
Tenants
1959
1935
1959
16%
6%
24%
1935
60%
38
25
17
34
44
Indiana .....................59
53
23
15
18
32
K e n tu c ky................... 65
54
18
9
17
37
................54
27
13
3
32
70
M is s o u ri.....................63
47
22
13
15
39
Tennessee ................. 61
46
18
8
21
46
Eighth District States ... 57
United S t a t e s .............57
42
47
19
22
10
10
23
20
48
42
Computed from Census of Agriculture data.
Tenant-operated farms in the district states in 1935
were concentrated in the cotton belt of Arkansas and
Mississippi where 60 and 70 per cent of the farms,
respectively, were operated by tenants. Most of the
decline in total number of farms in these two states
can be accounted for by the decline in tenant-operated
farms.
From 1934 to 1959 the number of farm operators
working off their farms 100 days or more per year
in the seven district states almost doubled, despite the
decline in total number of operators in the area.
Over the years, the proportion of farm operators in
the district states working off their farms 100 days or
more has been somewhat less than the national
average. However, in 1959 such employment equaled
the national proportion.
Each of the seven states had a larger number of
operators working off their farms 100 days or more
in 1959 than in earlier census years. However, during
the 1934-59 period, there was considerable variation
among the states in the trend of off-farm work per
formed by operators. For example, in 1934 only 5
per cent of the operators in Mississippi worked off
their farms 100 days or more. In 1959, this percentage
had increased to 30 (Table VII). Arkansas also had a
Table VII
Per Cent of Farm Operators Working Off Their Farm
100 or More Days
....
. .
.. . .
....
....
.. ..
Eighth District States Total........
United States Total ................ .. . .
Illin o is ...................... 41
Mississippi
Off-Farm Work in District States
1959
1934
32%
22
36
27
30
30
32
7%
8
14
10
5
9
11
30
30
9
11
Computed from Census of Agriculture data.
major gain in off-farm work by farm operators. The
change was less in Illinois and Kentucky.
The Role of Technological Advances
Changes in the structure of the nation’s agriculture
have resulted in large measure from technological
advances. Major changes in methods of production
were introduced throughout the 1800’s. Horse-drawn
mowing machines replaced the scythe and grain
cradle. The fanning mill gave way to the more
efficient threshing machine. Near the turn of the
century important uses began to develop for steam
and gasoline engines.
More recently technological change has come into
play on a wider scale and with a greater impact on
the industry. The trend toward mechanization has
continued at an increasing rate as more labor-saving
devices and larger equipment and power units have
Page 9
been introduced. This is a major force working toward
fewer farm workers and larger farms. In 1959 one
worker, in addition to performing more off-farm work,
farmed an average of 192 acres compared to an
average of 104 acres per worker in 1935.
This ability to farm more acres has been a force
working toward larger farms. Full owners have
obtained additional acres either by purchasing or
renting. If additional acres were rented by a full
owner his status changed to a part owner. Most full
owners, in attempting to maximize income by operat
ing larger farms, apparently found it more feasible
to gain control of additional acres by renting. Thus,
the part-owner group of farmers has not only gained
in number relative to tenants and full owners, but
the members of this group, with their larger farms,
(Table III) are perhaps also the most efficient pro
ducers.
♦
A tenant may increase his acreage by purchasing
land beyond what he is now leasing or he can lease
additional land. If he purchases land and continues
to rent land, he enters the part-owner class. In recent
years tenants have increased the size of their farms
at a greater rate than full owners.
Greater output per acre and per animal unit have
also been factors tending to reduce the number of
farm workers. Approximately the same amount of
labor is required for basic operations in the fields and
with livestock on mechanized farms regardless of the
level of output per unit. Thus, when production per
acre or per animal rises, output per worker increases
proportionately.
In recent years crop output per acre has been
pushed up substantially. Com yields averaged 52.5
bushels per acre in the three years 1958-1960 com
pared with an average of 23.5 bushels in the 1930-39
decade. Total crop production per acre averaged 63
per cent higher in the three years 1958-1960 than in
the decade of the thirties. Better seed, increased
fertilization, better disease and insect control, and
irrigation have been major yield-increasing factors.
With the increased yields and government crop con
trol programs, marginal acres have been removed
from crop production, further increasing average
output per acre and per man.
Of comparable importance have been the major
innovations in livestock production. Improved tech
nology in animal breeding and feeding has resulted
in substantially greater output per animal and per
pound of feed. Output of livestock products per
breeding animal increased 49 per cent from 1935 to
1959. In the period 1935-58 the amount of broilers
produced per hundred pounds of feed increased from
18.9 to 32.5 pounds, a gain of 72 per cent. Shorter
feeding periods have also reduced labor requirements
per unit of output. Further advances have been made
in disease control and mechanization of livestock
production contributing to increased labor efficiency
and larger operations.
The Response of Labor
Technological forces have worked toward a down
trend in number of farmers in recent years and a
substantial increase in work performed off their farms
by the remaining farmers. Also, in an increasing num
ber of cases farm wives or other members of farm
families work off the farm either on a part-time or
full-time basis.
The decline in the farm labor force has been
dictated by technological change, a relatively stable
per capita demand for farm commodities, and main
tained prices. Most of the technological changes in
agriculture have tended to increase both total output
and output per worker, reducing the number of work
ers needed for farm commodity production. With
Chart 2
Real Product per Man-Hour
in the Private Econom y - United States
1947-49=100
1947-49=100
Latest d a t a plottodt 1960 prelim inary
Source: Bure au o f La b or Statistics
increasing production efficiency and a relatively stable
per capita demand for farm commodities, pressure
was maintained on farm commodity prices and many
prospective farmers have found alternative employ
ment opportunities more attractive than opportunities
on the farm. In other cases prospective farm operators
and other workers have doubtless been unable to
find employment opportunities in agriculture as the
optimum size of farms increased. The combination of
two farms into one, a common occurrence in recent
years, has probably induced many would-be farmers
into other occupations. These adjustments generally
have a desirable effect on total national output to the
extent that the transfer of workers proceeds from lowpaying to higher-paying jobs.
It is generally agreed that returns to labor in agri
culture are below those in most other occupations.
Farm wage rates are generally well below average
wage rates in other industries. Furthermore, most
measures of per capita income of farm people show
that such income is well below that of the nonfarm
population. This disparity of farm and nonfarm in
comes has continued and perhaps widened in recent
years, despite the substantial decline in the farm labor
force. This disparity has been the prime motivating
force for the decline in number of farm operators and
workers, a decline which has been an integral part of
the increasing productivity of the economic system.
The failure of workers to move off the farm rapidly
enough to narrow the gap between farm and nonfarm
earnings probably results from noneconomic factors.
Reasons for the failure of more established farmers to
move out of agriculture include uncertainty of steady
employment in nonfarm occupations, lack of knowl
edge of economic opportunities in other occupations,
strong community ties and desire for rural appur
tenances, and inability because of age to train for
new occupations. Some of these reasons also apply
to a lesser extent to younger people who are selecting
an occupation. The fact that most migrants from the
farm apparently moved only short distances to other
occupations lends weight to the belief that rural
environment inhibits the mobility of farm labor. Pro
fessor D. Gale Johnson, of the University of Chicago,
found that about 60 per cent of farm-to-urban mi
grants stayed in the same state and about half of the
remaining 40 per cent moved to contiguous states2.
The inhibiting effect of age on migration from
agriculture is indicated by studies of groupings by
age of farm operators. A recent study of this type
indicates that only a small proportion of farm opera
tors in the North Central States changed to other
occupations after reaching 35 years of age. This same
study shows that most of the decline in number of
farmers in older age groups can be explained by the
reduced number of entrants into agriculture with the
groups, plus normal retirements.3
Despite the evidence presented in these studies,
there are indications that established operators, es
pecially in the tenant group, have been leaving the
farm. The rapid decline in tenant operators in Ar
2 Journal of Farm Economics, February 1951, ‘‘Functioning of the
L abor M arket.”
3 Kanel, Don, Journal of Farm Economics, May 1961, “Age Com
ponents of D ecrease in Number of Farmers, North Central
States, 1890-1954.”
kansas and Mississippi from 1954 to 1959 points to
this conclusion. Also, the fact that nonwhite operators
in each of these states declined almost 50 per cent
in the same period points to migration from the farm
of established operators in this group. Nationally,
however, such migrants may not be a significant por
tion of all farm operators.
The decline in the younger age groupings of farm
operators is an indication that labor adjustments in
agriculture occur primarily at the point of entry, that
is at the time when young men are deciding whether
to become farmers or whether to engage in other
pursuits. The number of farm operators under 25
years of age was 45 per cent less in 1954 than in 1950.
In comparison, the number of operators in the 25-to34-year age group was down 22 per cent and that in
the older age groups was down even less. A small
increase occurred in the 65-years-or-over age group
(Table VIII). However, this latter group, the only
one for which 1959 Census data have been released,
shows a 21 per cent decline from 1954.
Table VIII
Number of Farm Operators in the United States,
by Age Groups
(In thousands)
1954
1950
1945
1940
Under 25 years of age ........ ......
91
25 to 34 years of age .......... ...... 620
35 to 44 years of age ......... ....... 1,100
45 to 54 years of a ge ................. 1,154
55 to 64 years of age ................. 951
65 or more years of a ge ......
, . 779
Total Operators* .............. . . . . 4,695
164
791
1,187
1,157
1,000
745
5,044
147
854
1,324
1,432
1,173
867
5,797
233
949
1,251
1,428
1,147
828
5,836
Age Groups
* Data not precisely comparable with 1959 census data, used in Table I.
Source: Census of Agriculture, 1954.
When one considers the fact that established farm
ers are loath to leave their occupations until normal
retirement age, the remarkable feature of recent de
velopments is that the rate of decline in agricultural
workers has been so great. This reduction has been
striking even though it has been insufficient to equate
earnings of farm workers with earnings of those in
other occupations. The farm labor market may be
working as well as can be expected despite evidence
of excessive amounts of labor in the industry.
The reduced number of young operators points to
a continuing decline in number of farms and in the
farm labor force. This trend may continue until the
gap between earnings of farm and nonfarm workers
has narrowed.
■■•
" ■■
Page 11
EIGHTH FEDERAL RESERVE DISTRICT D A T A
BANK DEBITS1
Bank Credit
8th District M em ber Banks
Billions of D ollars
S e a s o n a lly A d ju ste d
Three Months Percentage Change from
Ending with
Previous
Like Three
July 1961)
Three
Months a
(In Millions)
Months2
Year Ago
Billions of D ollars
Reporting Centers
A rk a n sas
El Dorado .....................
$ 105
Fort Smith .................... .........215
Helena ......................... ......... 32
Little Rock ..............................808
Pine B lu ff............................... 156
Texarkana .................... ......... 87
+
+
—
+
+
+
Illinois
Alton ....................................148
East St. Louis & Nat'l Stock
Yards ................................ 418
Q u in c y ......................... .........166
Indiana
Evansville...................... .........572
* N o t a d ju st e d se a s o n a lly
Kentucky
2,943
Louisville ......................
Owensboro ................... .........173
-0 P adu cah.........................120
Total Loans*
W eekly Reporting Banks-Selected District Cities
Ratio Scale
Ratio Scale
3 %
5
9
6
7
1
+ 8 %
+13
— 10
+ 9
+ 8
+ 5
+ 5
+ 4
— 2
+ 2
— 6
+ 4
+
+ 3
6
+ 4
+ 3
+ 6
+ 1
+ 2
M ississippi
Greenville .................... .........102
+ 2
+ 6
M issouri
Cape G irardeau .............. ......... 67
Hannibal ...................... ......... 46
Jefferson C it y ................. ........ 519
Sedalia ................................. 61
St. L o u is........................
9,023
Springfield.................... .........365
— 1
H“ 5
+30
— 2
+ 4
+ 2
— 3
+ 8
+27
+ 5
+ 6
+ 3
Tennessee
Jackson ................................. 99
2,992
Memphis ......................
— 2
+ 3
+ 4
+16
T o ta l......................
$19,217
+
4%
+
8%
1 Debits to demand deposit accounts of individuals, partnerships and corpo
rations and states and political subdivisions.
2 Adjusted for seasonal influences.
♦Last W ednesday of month
Construction Contracts Awarded
Department Store Sales
1957=100
130f
M e m p h is
120
no
\\A
100
SI
St. Louis
90
130
110
100
11
120
110
100
v
AA
77V] a W'V ST1 1 1 X\ 1)fnA r
Louisville
Little Rock
120
90
1957=100
130
S e a so n a lly Adjusted
11 11
1959
11
, 11.1 1
1960
Latest d a ta plotted: July
Sta n d a rd M e tro p o lita n Statistical A re a s
Page 12
b
f
i .i.i.i i.
1961
90
130
120
110
100
90
1957 = 100
250r
1957 = 100
250
S e a s o n a lly Adjusted
ll.
8th District
200
200
150
100
150
.yW
1 A17\
U nited Sta te s
100
'
50
50
Latest data plotted: July prelim inary
-L -L -L
i
1 I 1 I 1 1 1 11 l-J-.l 1 1.1.1 1
1959
Source: F. W. D o d ge Corporation
1960
11
1
—1—L.J 1.1 1
1961
,
@FedFRASER