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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 Scottish Rite Luncheon Club Scottish Rite C a t h e d r a l St. L o u i s , M i s s o u r i Wednesday, September 2, 1964 ECONOMIC GROWTH O F ST. LOUIS We a r e c u r r e n t l y observing our C i t y ' s bicentennial and it h a s been suggested that I d i s c u s s with you some factors r e g a r d i n g our economic growth. While the i n t e r e s t s of the F e d e r a l R e s e r v e Bank of St. Louis 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 all of one state and p a r t s of six o t h e r s - - the focus on economic activity for the region is i m p o r t a n t l y 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 w h e r e it c u r r e n t l y is and to lay p l a n s for the future. To do this objectively and p r o p e r l y m a k e s it i m p o r t a n t that we look back over our h i s t o r y and t r a c e out some of the i m p o r t a n t developments. The f i r s t and m o s t 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 the take-off of the St. Louis economy in the 1840 ! s. steamboat era. This was when the city u s h e r e d in the While the r i v e r s and the s t e a m b o a t s w e r e boons to activity for many y e a r s , the r e s u l t i n g s u c c e s s encouraged complacency with a then booming economy r e s u l t i n g from n o r t h - s o u t h 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 i m p a c t on the economy of the South had a harmful effect on St. Louis. Chicago, on the other hand, d.urijkg this p e r i o d , was vigorously pushing the - 2 - building of the r a i l r o a d and t r a d e with the E a s t and upper Midwest. subsequently, we b e c a m e a v e r y i m p o r t a n t r a i l r o a d c e n t e r . Chicago had forged way ahead. Of c o u r s e , But not until This is the kind of m i s t a k e which should m a k e us r e s o l v e to r e m a i n a l e r t , s h a r p , and p r o g r e s s i v e . In the late 19th and e a r l y 20th c e n t u r i e s St. Louis laid a b r o a d and d i v e r s i f i e d economic b a s e . This p e r i o d m a r k e d the development of the city a s a wholesale and jobbing c e n t e r , with growth of the West and Southwest a contributing factor. Manufacturing also i n c r e a s e d in i m p o r t a n c e . The brewing, food p r o c e s s i n g , shoe manufacturing, m e a t p a c k i n g , c h e m i c a l and m e t a l s i n d u s t r i e s developed during this p e r i o d . A good deal h a s been m a d e of the diversified c h a r a c t e r of the St. Louis economy - and rightly so. It was this d i v e r s i t y , planted solidly around the t u r n of t h e 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 30 f 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 p e r i o d s 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 w e r e g e n e r a l r a t h e r than dominated by a few i n d u s t r i e s that had gone sour. With the second World War c a m e the a i r c r a f t industry. Since that t i m e m o v e m e n t s in the St. Louis economy have been l a r g e l y influenced by world and national events - including w a r s , national r e c e s s i o n s and p e r i o d s of national p r o s p e r i t y . But the e s s e n t i a l c h a r a c t e r i s t i c of the local economy - d i v e r s i t y - h a s continued to play an i m p o r t a n t r o l e and continues to have a stabilizing effect. - 3 So much for the b r o a d contours of the p a s t . L e t ' s take a look at our economic growth over the l a s t 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 b u s i n e s s and a r e i n t e r e s t e d l a r g e l y in those things which affect your own business. This is n a t u r a l and as it should be. 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 p r o m o t e r i s i n g activity - production and employment - in the economy as a whole, so a g g r e g a t e figures a r e meaningful 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 l a r g e l y on b r o a d 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 A r e a had a population of a little over two million - the 9th m o s t populous m e t r o p o l i t a n a r e a in the nation. This was about a 20 p e r cent i n c r e a s e over 1950, a good growth c o m p a r e d with an i n c r e a s e for the nation of about 19 p e r cent. And, according to a r e c e n t e s t i m a t e by the St. Louis Chapter of the A m e r i c a n S t a t i s t i c a l Association, the population is now in e x c e s s of 2 1/4 million. So, our r a t e of growth since I960 h a s b e e n g r e a t e r than the p r e v i o u s 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 . Now, turning to economic developments in St. L o u i s , 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 in July of this y e a r was at about a t h r e e billion annual r a t e or o n e - t h i r d higher than in the 1957-59 p e r i o d - six y e a r s ago. - 4 This i n c r e a s e from 57-59 to mid-1964 o c c u r r e d in s e v e r a l a r e a s . During t h e p e r i o d output in the c h e m i c a l i n d u s t r y 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 w e r e 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 p e r cent. The food i n d u s t r y - which includes m e a t packing and brewing - also showed a r i s e of about 14 p e r 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 a s we come down to the p r e s e n t , the evidence of i m p r o v e m e n t is even s t r o n g e r . over 6 p e r cent. In the l a s t y e a r manufacturing output r o s e This r i s e in the St. Louis a r e a was somewhat g r e a t e r than in the nation as a whole. The employment s t a t i s t i c s p r e s e n t a somewhat different p i c t u r e . Total p a y r o l l employment h a s i n c r e a s e d little over the p a s t six y e a r s . However, during the p a s t two y e a r s t h e r e h a s been a significant i n c r e a s e of about 2 p e r cent p e r y e a r . E s p e c i a l l y significant in the employment i n c r e a s e s has been a r e v i v a l in manufacturing employment. Employment in manufacturing h a s r i s e n sharply since 1961; this r i s e m a y m a r k a r e v e r s a l of a t r e n d which was a p p a r e n t 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 c o n s i d e r e d as evidence both of g r e a t e r p r o s p e r i t y and - 5 p e r h a p s of further i n c r e a s e s to c o m e . In mid-1964 d e p a r t m e n t s t o r e s a l e s in the St. Louis Metropolitan A r e a w e r e n e a r l y 15 p e r cent above the level in 1957-59. The r i s e in spending in the St. Louis A r e a is a l s o reflected in bank debits s t a t i s t i c s . The dollar volume of check p a y m e n t s i n c r e a s e d by m o r e than one-half during the period. 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 , n e a r l y 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 p a c e 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 , b e c a u s e on the one hand banking influences b u s i n e s s activity, while on the other it a l s o r e f l e c t s b u s i n e s s activity. It is significant, however, that loans by St. Louis banks have shown c o n s i d e r a b l e strength in r e c e n t y e a r s , especially since I960, and b u s i n e s s loans have b e e n p a r t i c u l a r l y strong. Total deposits in the Metropolitan A r e a have a l s o shown a healthy growth in r e c e n t y e a r s . than one-fifth. Since 1957-59 bank deposits have i n c r e a s e d by m o r e Thus, t h e r e h a s been no s h o r t a g e 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. L o u i s 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 p a c e of activity h a s quickened somewhat in the l a s t y e a r or two. balanced. M o r e o v e r , the growth has been While the i n c r e a s e h a s 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 m a d e i m p o r t a n t contributions. - 6 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 since the days of P i e r r e Laclede h a s not only been r o m a n t i c and i n t e r e s t i n g , but c o n s t r u c t i v e a s well. The a r e a h a s m a d e i m p o r t a n t contributions to the growth, development 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 i n s t a n c e s this was a t t r i b u t a b l e - at l e a s t in p a r t - to complacency. C e r t a i n l y this was the c a s e during the p e r i o d when we w e r e t a r d y in recognizing the opportunities m a d e p o s s i b l e by the development of the r a i l r o a d . On the other hand, our p r o g r e s s h a s not been so d e p r e s s e d as some of u s , on occasions, have b e e n guilty of d e s c r i b i n g it. Incidentally, - m a y I add - this negative a p p r o a c h on the p a r t of some of us is noticeable in other a r e a s and does not do j u s t i c e to the community. F o r instance, our w e a t h e r is m u c h b e t t e r 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 beautiful than we frequently c r e d i t it. In s u m m e r i t ' s much hotter down the R i v e r and in winter i t ! s much colder up the R i v e r . We need to a p p r e c i a t e our 9 or 10 months of r e a s o n a b l y p l e a s a n t weather r a t h e r than e m p h a s i z e our 60 or 90 d i s a g r e e a b l e days. I don't advocate u n w a r r a n t e d boasting, but I do believe in thinking and talking the positive. Over the y e a r s our growth h a s been m o r e steady than in other a r e a s of the country, with a g e n e r a l upward trend. - 7 - In looking to the future w e ' m u s t continue to look outward to the p o s s i b i l i t i e s 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 . t i m e , we need to look i n w a r d . At the s a m e 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 s u s t a i n and encourage the developm e n t of those b u s i n e s s e s , i n d u s t r i e s and people that a r e a l r e a d y h e r e . 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 s i d e , j u s t for e x a m p l e , we need to m a k e s u r e 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 i n d u s t r y and b u s i n e s s we have a s well as to a t t r a c t new. It is i m p o r t a n t 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 c a l l s for is adequate s t r e e t s and r o a d s and eventually - undoubtedly - new m e a n s and methods of t r a n s p o r t a t i o n . But, equally i m p o r t a n t , we need to look at our people p r o b l e m s . 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 m e t . now c o n c e r n e d with our p e o p l e . a s k any n e w c o m e r s . family community. Pointing t h e s e up d o e s n ' t m e a n that we a r e not It is c l e a r that St. Louis is a w a r m community - Look at our c h u r c h e s , schools and p a r k s . Ours is a B e t t e r yet, few Metropolitan A r e a s of c o m p a r a b l e s i z e support a United Fund Campaign r a i s i n g m o r e than $9 1/2 million. A s e r i o u s p r o b l e m of the a r e a is pointed up by the e x c e s s i v e c r i m e rate. A high p e r c e n t a g e of those involved a r e from what is r e f e r r e d to as the Inner City. H e r e we find a high r a t e of unemployed, n u m e r o u s c a s e s of school d r o p - o u t s , women with many kids but no h u s b a n d s , hunger and filth. - 8 - It is a situation we would like to t u r n our backs on, walk away from and forget it; one where we a r e s o m e t i m e s prone to say, " T h e y ' r e no good, it on t h e m s e l v e s , " "They ought to go to work. If "They brought But i t ' s not that s i m p l e . I t ' s t h e r e ; i t ! s not going away; and unless something is done i t ! s going to get w o r s e , A s t a r t has been m a d e and I a m p l e a s e d to say that it has been initiated through the cooperative effort of both the p r i v a t e and the public s e c t o r s . One p r o g r a m with which I a m f a m i l i a r is the YMCA Inner City Youth O u t r e a c h P r o g r a m which was developed l a s t y e a r . Its b a s i c a i m is to take the y o u n g s t e r s in the a r e a at an e a r l y a g e , help t h e m understand what a " r e a l man 11 i s , and lead them into an urgent d e s i r e to become one.. These children a r e approached and a t t r a c t e d through the usual " Y " p r o g r a m of a t h l e t i c s , which of itself t e a c h e s m a n y fine l e s s o n s - but the ultimate a i m is to build m e n . This p r o g r a m was p r e s e n t e d to the United Fund which recognized the need and a p p r o p r i a t e d $30, 000 for this y e a r ' s initial undertaking. In view of the r e q u i r e m e n t s of the other 116 worthwhile Fund a g e n c i e s , this $30,000 was m o s t g e n e r o u s , but due to the s e r i o u s n e s s of the p r o b l e m s and the v a s t n e s s of the undertaking, it is negligible. The p r o g r a m c a l l s for outfitting s m a l l vans with athletic equipment - b a s e b a l l , football, volley b a l l , t r a m p o l i n e s , and s i m i l a r equipment - and taking the p r o g r a m to the k i d s . The Downtown R o t a r y Club b e c a m e i n t e r e s t e d and has provided two v a n s . O t h e r s have given office equipment and athletic g e a r . staff is at work and the p r o g r a m is under way. the Inner City a r e a have been e s t a b l i s h e d . about 500 boys a r e p a r t i c i p a t i n g . even after this s h o r t e x p e r i e n c e . A s m a l l but dedicated Since J a n u a r y , ten sites within T w e n t y - s e v e n clubs with a total of The value of the p r o g r a m is a l r e a d y evident - 9 - $6, 000 is needed to complete the p r o g r a m this y e a r . come from is not yet c l e a r , but it m u s t and is bound to c o m e . o t h e r s r e l a t e d to it m u s t be m e t . Where this will This p r o b l e m and These people m u s t be encouraged and a s s i s t e d to b e c o m e people with m o r a l fiber, with at l e a s t r e a s o n a b l e educational b a c k g r o u n d s , qualified to p e r f o r m a job and with an ambition to hold one. Some day St. Louis will know about the p r o g r a m ; will a p p r e c i a t e its v a l u e , and will not only u n d e r w r i t e it and the other United Fund Agencies but will i m p r o v e and expand it. T h e s e and r e l a t e d p r o b l e m s a r e ones which m u s t be solved if we a r e to expect continued economic growth and i m p r o v e m e n t of quality of the m e t r o politan a r e a . They m u s t be solved in the i n t e r e s t of our own selfish safety. Surely they will be solved b e c a u s e these people a r e a p a r t of mankind and n no m a n is an island; no m a n stands alone. u All of t h e s e 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 , s y m p h o n i e s , m u s e u m s , g a r d e n s and p a r k s - cost m o n e y . We a r e able to m a k e e s t i m a t e s as to the c u r r e n t cost of doing s o m e of t h e s e things that need to be done, but we a r e absolutely unable to e s t i m a t e the l o n g - r u n cost if t h e s e 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 w e r e l a r g e l y along the lines of b r o a d a g g r e g a t e s . How do all of t h e s e i t e m s add up, in the a g g r e g a t e , to expanding output, r i s i n g employment, and g r e a t e r economic o p p o r t u n i t i e s ? I think the a n s w e r to this is fairly simple and fairly s t r a i g h t f o r w a r d . Gains along political, c u l t u r a l , and educational - as well as economic - lines a r e - 10 - 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 - - t o that i n d u s t r y which is h e r e and.that i n d u s t r y 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 m a k e St. Louis a good place to live we m a k e St. Louis a good place to work. In this connection two s t a t e m e n t s s t r i k e home to m e . The f i r s t was the admonition of a dynamic m a n m a d e frequently to his fellow citizens in the i n t e r e s t of the city he loved - "Keep the d i r t flying. fl The other you know: Except the L o r d build the h o u s e , they labor in vain that build it. Except the L o r d keep the city, the watchman stays awake in vain.
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