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ECONOMIC GROWTH OF S T . LOUIS Delivered by H a r r y A . Shuford, P r e s i d e n t F e d e r a l R e s e r v e Bank of St. Louis at the Luncheon Meeting of the R o t a r y Club of St. Louis Statler Hilton Hotel St. L o u i s , M i s s o u r i T h u r s d a y , M a r c h 19, 1964 ECONOMIC G R O W T H OF ST, LOUIS The St. Louis n e w s p a p e r s , television and radio have provided us with an abundance of useful information during the occasion of this city's bicentennial celebration. I think these news media a r e to be commended for their fine work even though their p r e s e n t a t i o n s may make my r e m a r k s of questionable value. N e v e r t h e l e s s , for the next twenty minutes or so I would like to talk to you about the economic growth of Metropolitan St. L o u i s . After all, this was the topic assigned me and then, too, the F e d e r a l R e s e r v e Bank of St. Louis is i n t e r e s t e d in St. L o u i s . Although the i n t e r e s t s of the bank a r e devoted to national policy and to the entire Eighth F e d e r a l R e s e r v e D i s t r i c t - which includes p a r t s of seven states - the focus on economic activity for the region is importantly on the St. Louis Metropolitan A r e a . Regional economic conditions a r e influenced in no s m a l l p a r t by the St. Louis economy. Independently of whether t h e r e is a bicentennial celebration, it is a good idea for a community to take stock of where it c u r r e n t l y is and to lay plans for the future. To do this objectively and p r o p e r l y m a k e s it important that we look back over our history and t r a c e out some of the important developments. The first and the most obvious fact about St. Louis is that it is located on the M i s s i s s i p p i R i v e r . This g r e a t n a t u r a l r e s o u r c e provided - 2 - the take-off of the St. Louis economy in the 1840's. city ushered in the steamboat e r a . This was when the While this was a boon to activity for many y e a r s , it tended to encourage complacency with a then booming economy resulting from north-south t r a d e ; and tended to blind the city, for a t i m e , to the value of the r a i l r o a d and the d e s i r a b i l i t y for encouraging its development. This complacency, coupled with the Civil War and its impact on the economy of the South had a harmful effect on St. L o u i s . Chicago, on the other hand, during this period, was vigorously pushing the building of the r a i l r o a d and t r a d e with the East and upper Midwest. Of c o u r s e , subsequently, we b e c a m e a most important r a i l r o a d c e n t e r . In the late 19th and e a r l y 20th centuries St. Louis laid a broad and diversified economic b a s e . This period m a r k e d the development of the city as a wholesale and jobbing c e n t e r , with growth of the West and Southwest a contributing factor. importance. Manufacturing also i n c r e a s e d in The brewing, food p r o c e s s i n g , shoe manufacturing, meat packing, chemical and m e t a l s i n d u s t r i e s developed during this period. A good deal has been made of the diversified c h a r a c t e r of the St. Louis economy. It was this d i v e r s i t y , planted solidly around the t u r n of the century that tended to m o d e r a t e the economy during the booming 20 f s and to buoy the economy during the 3 0 ! s . During p e r i o d s of p r o s p e r i t y the St. Louis economy tended to r i s e , but the r i s e was a g e n e r a l i n c r e a s e among many lines r a t h e r than a boom in a few a r e a s . So, too, during periods of r e c e s s i o n the St. Louis economy tended to decline but h e r e again the declines were g e n e r a l , not dominated by a few i n d u s t r i e s that had gone s o u r . - 3 - With the second World War came the a i r c r a f t industry. Since that time movements in the St. Louis economy have been largely influenced by world and national events - including w a r s , national r e c e s s i o n s and periods of national p r o s p e r i t y . But the essential c h a r a c t e r i s t i c of the local economy - diversity - has continued to play an important role and continues to have a stabilizing effect. So much for the broad contours of the p a s t . L e t ! s take a look at our economic growth over the last decade or so and at those t r e n d s which s e e m to be c u r r e n t l y in motion. Most of you a r e in p a r t i c u l a r lines of business and a r e i n t e r e s t e d largely in those things which affect your own b u s i n e s s . This is n a t u r a l and as it should b e . However, the b u s i n e s s of the F e d e r a l R e s e r v e System is to help promote rising activity - production and employment - in the economy as a whole, so aggregate figures a r e m e a n ingful to u s . With this in mind, this d i s c u s s i o n of developments in St. Louis will focus largely on broad m e a s u r e s of production and economic activity. F i r s t , a word about people. In I960 the St. Louis Metropolitan Area had a population of a little over two million - the 9th most populous metropolitan a r e a in the nation. This was about a 20 per cent i n c r e a s e over 1950. A good growth compared with an i n c r e a s e for the nation of about 19 per cent. And, according to an e s t i m a t e just being announced at a meeting of the St. Louis Chapter of the A m e r i c a n Statistical Association, the population is 2 1/4 million. So, our r a t e of growth since I960 has been g r e a t e r than the previous ten y e a r s and, if sustained till 1970, would be one of our l a r g e s t decade i n c r e a s e s on r e c o r d . - 4 - Now, turning to economic developments in St. Louis, it a p p e a r s that the a r e a is generating a growing s t r e a m of goods and s e r v i c e s . Dollar value of manufactured goods p r o c e s s e d in the a r e a l a s t year was about t h r e e billion or a third higher than in 1958. in s t a t i s t i c s on power u s e . This r i s e was also reflected Industrial use of e l e c t r i c power has r i s e n by m o r e than one-third since 1958. P e r h a p s m o r e i m p o r t a n t , the i n c r e a s e s since 1958 have been at a r a t e n e a r l y double that of the previous four y e a r s . What accounts for the 1958-63 r i s e ? During the period output in the c h e m i c a l industry r o s e by n e a r l y one-half and production of fabricated m e t a l s showed a strong gain. But the s h a r p e s t i n c r e a s e s were in t r a n s p o r t a t i o n equipment - which includes the a i r c r a f t and space industry with a r i s e of over 95 per cent. The food industry - which includes m e a t packing and brewing - also showed a r i s e of about 14 per cent, the s a m e as in the nation. So we see that the pace of activity has picked up since the slight r e c e s s i o n in 1958, but as we come down to the p r e s e n t , the evidence of improvement is even s t r o n g e r . In the last year manufacturing output and industrial power use r o s e n e a r l y 10 per cent. This r i s e in the St. Louis a r e a was substantially g r e a t e r than in the nation as a whole. This s a m e p i c t u r e , of a definite improvement since 1958 and of an even s h a r p e r r i s e in the r e c e n t p a s t , can be found in the employment s t a t i s t i c s . The i n c r e a s e in employment over the past year was at a r a t e about t h r e e times as g r e a t as it had been over the previous four y e a r s . - 5 Especially significant in the employment i n c r e a s e s has been a revival in manufacturing employment. Employment in manufacturing has r i s e n sharply since 1961; this r i s e may m a r k a r e v e r s a l of a trend which was apparent during the late 1950 f s. Another factor - St. Louisans spend money, - and they appear to have been spending at a faster pace in r e c e n t y e a r s than somewhat e a r l i e r . This, too, may be considered as evidence both of g r e a t e r p r o s p e r i t y and perhaps of further i n c r e a s e s to come. In 1963 r e t a i l sales in the St. Louis Metropolitan A r e a r e a c h e d n e a r l y $3 billion, one-fourth above the level in 1958. The r i s e in spending in the St. Louis A r e a is also reflected in bank debits s t a t i s t i c s . The dollar volume of check payments has i n c r e a s e d by nearly one-half since 1958. This r e p r e s e n t s a 9 p e r cent annual r a t e of i n c r e a s e , nearly twice the r a t e of gain from 1954 to 1958. Now, coming from the F e d e r a l R e s e r v e Bank we, of c o u r s e , think that the pace of economic activity is influenced by the activity of banks. Banking s t a t i s t i c s , I might add, a r e difficult to i n t e r p r e t , because on the one hand banking influences b u s i n e s s activity, while on the other it also reflects b u s i n e s s activity. It is significant, however, that b u s i n e s s loans by St. Louis banks have shown considerable strength in r e c e n t y e a r s , p a r t i c u l a r l y since I960. Total deposits in the Metropolitan A r e a have also shown a healthy growth in r e c e n t y e a r s . Since 1958 bank deposits have i n c r e a s e d by m o r e - 6 - than one-fifth. Thus, t h e r e has been no shortage of loan funds or loans for worthwhile p r o j e c t s . All in all, it a p p e a r s that the St. Louis economy has experienced a substantial i n c r e a s e in the l a s t five y e a r s and that the pace of activity has quickened somewhat in the p a s t y e a r or so. balanced. Moreover, the growth has been While the i n c r e a s e has been especially g r e a t in t r a n s p o r t a t i o n equipment - including a i r c r a f t and space - other a r e a s of the economy have made important contributions. In s u m m a r y , it is c l e a r that the h i s t o r y of economic growth in St. Louis has not only been romantic and interesting, but constructive as well. The a r e a has made important contributions to the growth, develop- ment and well being of the nation. Clearly, too, we have had our ups and downs and a review of the p a s t suggests that we have lagged at t i m e s . Speaking candidly, in some instances this was attributable - at l e a s t in p a r t - to complacency. Certainly this was the c a s e during the period when we were tardy in recognizing the opportunities made possible by the development of the r a i l r o a d . If we looked at some period longer than 1958 to date we would get a different p i c t u r e . And if we went back to 1956 it wouldn't look quite so good. On the other hand, our p r o g r e s s has not been so d e p r e s s e d as some of us, on occasions, have been guilty of describing it. Incidentally, - may I add - this negative approach on the p a r t of some of us is noticeable in other a r e a s and does not do justice to the community. For instance, our weather is much better than we s o m e t i m e s r e p r e s e n t it, and our city is much m o r e http://fraser.stlouisfed.org/ beautiful Federal Reserve Bank of St. Louis than we frequently credit it. •- 7 - I don't advocate unwarranted boasting, but I do believe in thinking, talking, and accentuating the positive. Over the y e a r s our growth has been m o r e steady than in other a r e a s of the country, with a general upward trend. In looking to the future we must continue to look outward to the possibilities of new p r o j e c t s and to the p o s s i b i l i t i e s of new i n d u s t r i e s . At the same time, we nee4 to look inward. We m u s t r e m e m b e r the value of our c u r r e n t diversified economy and do what we can to sustain and encourage the development of those b u s i n e s s e s , industries and people that are already here. This m e a n s we need to be concerned about some of our existing p r o b l e m s , both our economic p r o b l e m s and our people p r o b l e m s . On the economic side, just for example, we need to make sure that we have adequate t r a n s p o r t a t i o n facilities in o r d e r to keep the industry and b u s i n e s s we have as well as to a t t r a c t new. It is important that we be able to move people and m a t e r i a l s rapidly through and ^around the local economy. The l e a s t this calls for is adequate s t r e e t s and roads and, eventually - undoubtedly - new means and methods of transportation. But, p e r h a p s equally important, we need to look at our people problems. Ours a r e no different from other Metropolitan c e n t e r s , but the pay-off will be on whether and how they a r e met. Pointing these up d o e s n ' t mean that we a r e not now concerned with our people. Louis is a w a r m community - ask any n e w c o m e r s . schools and p a r k s . Ours is a family community. It is c l e a r that St. Look at our c h u r c h e s , B e t t e r yet, few Metropolitan A r e a s of comparable size support a United Fund Campaign raising m o r e than $9 1/2 million. - 8 There a r e other p r o g r a m s c u r r e n t l y under way which evidence our concern for all the people. You gentlemen a r e an important p a r t of the new YMCA Inner-City Youth Outreach P r o g r a m which h a s the support and backing of our United Fund. As a m a t t e r of fact, it was your i n t e r e s t and generosity last year in providing a youth mobile - and now a second one - that h a s opened a new frontier for responsible and collective action in the i n t e r e s t of the youth of the community. This is getting your motto, into action. M Service Above Self, f! off the wall and The good already accomplished by this new p r o g r a m is only overshadowed by the p r o s p e c t s it has opened up. However, much r e m a i n s to be done for those who, because of a lack of skills, education, or m o r a l fiber a r e not only unable to s h a r e appropriately in the goodness of A m e r i c a but constitute a drag on our economy. They need to be equipped so they can be moved off the relief- r o l l s and on to the p a y r o l l s . willing but a r e anxious. Some won't, it is t r u e , but many a r e not only I a g r e e that the answer to poverty is work - jobs. These people need to be equipped to hold a job. I f m glad to see cooperative private efforts like those of the n Y M , the Rotary Club, and the United Fund tackle the undertaking. And now we see a new development which under the l e a d e r s h i p of some of our able citizens h a s r e a l potential for good work The Human Development P r o j e c t . All of these things and m o r e - control of a i r and water pollution, schools and u n i v e r s i t i e s , symphonies, m u s e u m s , gardens and p a r k s - cost money. - 9 We a r e able to make e s t i m a t e s as to the c u r r e n t cost of doing some of these things that need to be done, but we a r e absolutely unable to e s t i m a t e the long-run cost if these things a r e not done. E a r l i e r I suggested that our i n t e r e s t s were largely along the lines of broad a g g r e g a t e s . How do all of these i t e m s add up, in the aggregate, to expanding output, r i s i n g employment, and g r e a t e r economic opportunities? I think the answer to this is fairly simple and fairly straightforward. Gains along political, cultural, and educational - as well as economic lines a r e p r e r e q u i s i t e s to insuring the a t t r a c t i v e n e s s of our a r e a - - - - to that industry which is h e r e and that industry which we would like to see h e r e . In the final a n a l y s i s , to the extent that we make St. Louis a good place to live we make St. Louis a good place to work. In this connection two statements strike home to me. The first was the admonition of a dynamic man made frequently to his fellow citizens in the i n t e r e s t of the city he loved - f , Keep the d i r t flying. Tf The other you know: Except the Lord build the house, they labor in vain that build it. Except the Lord keep the city, the watchman stays awake in vain.
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