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MONTHLY
BUSINESS
REVIEW
oft h e
Volume 32
FEDERAL
RESERVE
BANK
Dallas, Texas, June 1, 1947
of
Dallas
Number 6
THE BOND-A-MONTH PLAN
I
One of the features of the June-July promotion campaign of the United States Treasury this year
will be emphasis of the Bond-A-Month Plan, which offers to professional men, farmers, self-employed
persons, employees of small business firms, and others who are not employed on a fixed wage or salary
basis the same automatic bond-buying privileges that the Pay Roll Savings Plan affords to millions
of wage and salary earners. The campaign, of course, will re-emphasize the importance of the Pay
Roll Savings Plan as a systematic and comparatively painless way of saving by wage and salary earners
in business and industry for the regular purchase of United States savings bonds.
The Bond-A-Month Plan is not new or untried; it has been used successfully by many banks for
the past several years. The Plan involves only a few simple steps. Banks offer to their depositors the
privilege of buying United States savings bonds-Series E, F, or G--regularly and automatically. The
deposit;or signs a card provided by the Treasury Department authorizing the bank to make monthly
purc~es. The bank merely debits the depositor's bank account for the purchase price of the bond
each rftonth. Bonds are mailed to depositors as purchased. Unlike the Pay Roll Savings Plan in one
respect, the Bond-A-Month Plan is not a partial payment plan; each single monthly charge must
cover the purchase price of a bond or combination of bonds. The Bond-A-Month Plan, however,
supplements the Pay Roll Savings Plan and rounds out the savings bond program of the Treasury
by providing the privilege of systematic and automatic saving to virtually every American family.
Many problems confront the country and its leaders at present, but none of them is of greater
importance to each of us than the problem of management of the large Federal debt. Sound management of our Federal debt must include reduction of the debt as fast as is practicable and, also,
spreading the debt ' widely among the largest possible number of individual investors. The Pay Roll
Savings1i>lan has been very successful in reaching millions of the nation's wage and salary earners.
The Bond-A-Month plan will reach additional millions of people who are able and, in fact, willing
to buy United States savings bonds systematically but who perhaps are not doing so because purchase of the bonds has not been made as automatic and easy for them as it has for others who enjoy
the privilege of participating in the Pay Roll Savings Plan. The Bond-A-Month Plan, therefore,
offers an opportunity to spread more widely the ownership of Government securities and, thus, contribute to the solution of the debt management problem.
Recognizing the importance of obtaining the active support and cooperation of the banks of
the nation in carrying out this program, the Treasury has emphasized the twin objectives of universal
acceptance of the Bond-A-Month Plan by the banks of the nation and by the nation's bank depositors.
Banks are urged to support the Treasury Department's program actively by bringing to the attention
of their depositors the real advantages of the Plan. Concentrated national and local advertising and
publicity 'n all media will emphasize the part played by the banks in making this program a success'
by directing individuals to "ask at your bank ... see your banker" for information or details about
the Bond-A-Month Plan. Banking leaders and banking associations throughout the country, recognizing the genuine merits of the Bond-A-Month Plan, have pledged their active support to the program.
-SAVE THE EASY AUTOMATIC WAY-
WHERE YOU WORK - - - WHERE YOU BANK
This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)
80
MONTHLY BUSINESS REVIEW
STRUCTURAL CHARACTERISTICS OF MEMBER BANKS
ELEVENTH FEDERAL RESERVE DISTRICT
The very large expansion of deposits and banking resour ces in the Eleventh Federal Reserve
District during the war years resulted in a significant movemen t of many of the member banks in
the district upward from smaller into larger bank size-groups. Largely as a consequence of such
wartime developments as deficit-financing, large Treasury expenditures in the area, and active
demand at relatively high prices for the area's products, all of w hich were factors beyond the control
or influence of the banks of the district, many $500,000 banks found that they had grown to one
or two million dollar stature; million dollar banks found their deposits soaring to three or four million
dollars or higher as war-created funds flowed into their communities; and the larger city banks became
metropolitan banks in the full sense of that expression. Table 1, classifying the member banks of the
district on the basis of end-of-year reports in 1939 and 1946 into eight size-groups, ranging from
the smallest banks which reported deposits of Jess than $500,000 each, to the largest institutions
reporting deposits of more than $50,000,000, shows the extent to which the growth developments
of the war years and first full postwar year influenced the district's bank ing structure in this important respect.
TABLE 1
At the end of 1939 about 38 per cent of the
district's member banks were small institutions
MEMBER BANKS CLASSIFIED BY SIZE-GROUPS
ELEVENTH FEDERAL RESERVE DISTRICT
holding deposits of less than $500,000, while 337
Bank Size·Groups
banks, or approximately 64 per cent of the member
Total Depooits
Dec.
Dee.
(Thousands of dollars)
1939
1946
banks, held deposits of less than $1,000,000. By Under $500 ............. . ..... .. • ...
200
20
137
58
December 31, 1946, however, the situation had $500 to $999 . ......... . . . ..... . .. • .. .
91
$1,000 to $1 ,999 . .. . . . .. . . . . . . .... . . . .
126
227
changed to such an extent that only about 3.4 per $2,000 to $4,999 . . . . ... . ...... . . . .... .
45
$5,000 to $9,999 . .. . . . .. . • . • . . ...... . .
21
78
cent of the member banks of the district held de- 310,000 to $24,999 . ... . . . . . . ... . . . . . . .
20
46
to $49, 999 ... . . . ..... . . . . . . .
20
8
posits of less than $ 500,000 and only 78 banks, or $25,000
$50,000 and over . . .. . ...•.• . .. . . . .. •.
6
20
- -about 13 per cent of the total, were in the less
Total member banks . .. . . . .. .
528*
595
than $1,000,000 class. On the other hand, the num' Does not include 16 member ban ks, holding average deber of banks holding deposits of $25,000,000 to posits of approximately $640 ,000, wllicll merged witll other
$49,999,999 and of $50,000,000 or more on De- banks or dropped out of the System before t be end of 1943.
cember 31, 1946, increased from about 2.7 per cent
to 6.7 per cent of the member banks in the district, while almost 73 per cent of the district's member
banks became concentrated in the three size-groups ranging from $1,000,000 to $10,000,000.
As a result of the movement of banks into different size-groups and the tendency of wartime
deposit increases to concentrate more heavily in institutions of certain size-groups, the relative shares
of member banks in the total deposits of the district shifted considerably during the period. Five
groups of banks, classified on the basis of deposits, showed a decline in their shares of member bank
deposits at the end of 1946, as compared with their holdings at the end of 1939, despite, in some cases,
substantial dollar increases; three groups of banks showed relative increases ranging from nominal
to very substantial. In the case of the two smallest size-groups, the decline in their relative shares of
the district's total deposits is explained by the decline in the number of banks in the groups. Other
instances of a lower-or higher-proportionate holding of the district's deposits reflect not only
the shifting of banks among size-groups but also the unequal impact of the deposit growth upon
banks of different size_
MONTHLY BUSINESS REVIEW
81
The largest aggregate dollar increases in deposits during the period occurred in the size-groups
holding deposits of $2,000, 000 to $4,999,999 and of $50,000,000 or more. In the former case the
aggregate increase, amounting to approximately $600,000,000, was caused largely by the substantial
growth in the number of banks in the group, since average deposits per bank in that group increased
only about $100,000. In the case of the largest banks, however, although the number of banks in the
group rose from 6 to 20, the
average deposits per bank inTABLE 2
creased by more than $50,000,TOTAL DEPOSITS OF MEMBER BANKS BY SIZE-GROUPS
000, or to approximately $123,ELEVENTH FEDERAL RESERVE DISTRICT
500,000 at the end of 1946, thus
(Dollar figures in thousands)
reflecting the fact that more
Bank Site-GrouP8
than $2,000,000,000, or about
--:P.. -::CCe-nt---::D~~~rs'--=-pc, Ce=-nl--=-Pc-,C=-c-nl-----=D~~~i------,P-..-C-en-tTotal Deposits
of Danks
of Deposi(,s
of Banks
of Dcpo!tits
53 per cent of the deposit in56,392
37.9
3.6
3.4
7,563
0.1
crease during the period was Under $500 ....... .
26.0
95,856
6.1
9.7
$500 to $999 ...... .
44,577
0.8
concentrated among these larg- $1,000 to $1,999 ... . 17.2
8.1
21.2
126,106
187,406
3.5
143,395
9.2
38.1
743,533
8.5
13.9
est banks. This development $2,000 to $4,999 . . . .
143,822
9 .2
522,331
4.0
13.1
$5,000 to $9,999 ... .
9.7
also explains how the share of $10,000 to $24,999 . .
18 .9
296,371
3.8
7.7
720,610
13.4
17.2
3.4
269,168
1.5
691,024
12 .8
the district's total deposits held $25,000 to $49,999 ..
27 .7
435,356
1.1
3.4
2,468,961
45.8
$50,000 and over ...
by the banks in this largest size- ---100.0
100.0
1,566,466
Total. ... .... . 100 .0
5,386,005
100.0
group increased from almost 28
per cent at the end of 1939 to
almost 46 per cent as of December 31, 1946.
In brief, the wartime deposit growth and the pattern of concentration of the flow of funds
among the member banks in the district resulted in the evolution of a number of banks relatively
very large, the wholesale disappearance of banks from the smallest size-groups, and a very marked
concentration of banks in the middle-size groups with deposits ranging between $1,000,000 and
$10,000,000.
Banking data as of December 31, 1946, reflect clearly some of the internal structural characteristics of the member banks in the Eleventh District and emphasize the more or less natural differences inherent in the operations of banks of different size-groups; also, in a general way, the data
tend to reflect the financial characteristics of banks serving different types of communities and customers, since, in this district, bank size tends to bear a fairly close relation to the size and economic
character of the community. Moreover, as smaller banks move upward into larger size-groups, they
tend to losl' some of their former structural characteristics and take on characteristics of the banks
of the size-group into which they have risen. Most of the more important items in the financial
structure of the member banks of the district appear to follow a rather consistent pattern of variation when comparison is made on the basis of the size of banks. For example, differences by types
of deposits within the deposit structure of member banks of different size-groups, by categories of
loans, by elements of capital, and by types of Government securities reflect to a considerable extent a
progressive r~lationship from less to greater importance, or the reverse, which seems to be associated
with bank size. When these data are classified, therefore, according to the different size-groups of the
member banks, they tend to provide, perhaps, a rough measure or standard with which individual
banks in different size-groups may compare their internal structure and the charactcr of their operat ions.
The relative importance of different types of deposits in the deposit structure of banks of different
size-groups varies widely, although the changing relationships progress rather smoothly and steadily
through the different size-groups from the smallest to the largest. At one extreme are the banks in
the smallest size-group, which reported deposits of less than $500,000. In this group over 95 per cent
of total deposits were in the form of demand deposits of individuals, partnerships, and corporations,
82
MONTHLY BUSINESS REVIEW
while time deposits were of very little significance in terms of the total, as they represented only
fractionally more than one per cent. These banks as a group apparently have made little, if any,
effort to attract time deposits, or possibly the low interest return on such deposits is so insignificant
when related to a comparatively small account as to have offered no inducement to depositors to forego
the convenience and liquidity features of the demand-deposit privilege. In fact, time deposits apparently are not an important element in the deposit structure of banks in any of the size-groups with
total deposits of less than $ 5,000,000.
At the other size-group extreme, demand deposits of individuals, partnerships, and corporations represented approximately 54 per cent of total deposits of banks in the $50,000,000 size-group,
while time deposits of the banks of this group amounted to slightly more than 10 per cent of total
deposits. The tendency of demand deposits of individuals, partnerships, and corporations to decline
in relative importance as the bank size-groups progress upward is due, of course, to the increased
importance to those bank groups of deposits of banks and of various government agencies-federal,
state, and local-as well as to a larger volume of time deposits. These larger banks tend to seek
diversified banking business more aggressively as their facilities permit; this tendency is especially
true in connection with the attraction of deposits of banks and local government agencies. Likewise,
there may have been a tendency during comparatively recent months on the part of some of the
banks in these larger size-groups t o be more receptive to the growth of time deposits, especially since
the reserve positions of banks in these groups have been somewhat tighter than has been the case
for the smaller banks. Correspondent banking activities, as reflected by interbank deposits, apparently
become relatively important in this district only as banks progress beyond the $10,000,000 deposit level.
T AllLE 3
DEPOSIT STRUCTURE OF MEMBER BANKS BY SIZE· GROUPS
ELEVENTH FEDER AL RESERVE DISTRICT
DECEMBER 1946
(Dollar figures in thousands)
$2,000- $5,000$.5003 1,000510,000- $25,000-
As Per Cent of
T otal Deposits
Demand deposits-indiViduals,
partnerships, and corporations
Time deposits - individuals,
part nerships, and corporations
United States Government deposits
Bank deposits ..... . . ..........
Other deposits . ......... . .....
Totsl. . . .. .. . .. . ....... . .
$500
$999
$1,999
84,999
$9,999
$24,999
$49,999
550,000
over
T otal
95.2
91.7
89.9
86 .3
80 .7
73 .2
62. 5
54 .6
66 .6
1. 3
0.8
2 .7
2 .2
0 .6
0.2
5.3
1.7
1. 0
0 .6
G.8
2.8
1.1
1.1
8. 7
6 .9
1.4
3 .2
7 .8
10 .2
1.9
7 .0
7. 7
11.2
2 .3
14. 2
9.8
10 .2
1.8
23 .2
10 .2
8 .6
1.7
13 .9
9.2
100 .0
100 .0
100 .0
100 .0
100 .0
100 .0
100 .0
100.0
100.0
Total holdings of United States Government securities as a percentage of total investments at
the end of 1946 varied within a comparatively narrow range and in the aggregate reflected no consistent pattern of variation by bank size-groups. United States Governments of all types represented
from approximately 87 per cent to more than 94 per cent of the investments of member banks in
the different size-groups. The composition of the Government portfolios, however, reflected marked
differences among groups of banks classified according to size. Treasury bills and Treasury certificates of indebtedness, for example, represented a much larger proportion of the holdings of Government securities of the banks of the smallest size-group than of banks of any other size-group at the
end of 1946. These small banks held approximately 13 per cent of their Governments in the form of
Treasury bills and about 36 per cent in Treasury certificates of indebtedness, as compared with seventenths of one per cent and 22 per cent, respectively, for the largest size-group banks. Treasury bonds,
on the other hand, accounted for 6 5 per cent of the Governments owned by the 20 largest banks in
the district, as compared with about 45 per cent for the 20 smallest banks.
A substantially larger proportion of the total earning assets of the smallest size-group of banks
was invested in the lowest yield short-term Governments than was the case for the largest banks,
which in the past few years have extended the maturity pattern of their Government security holdings.
83
M'ONTHtY BUSINESS REVIEW
Approximately 28 per cent of the total earning assets of the smallest banks were in bills and certificates at the end of December 1946, as compared with about 12 per cent for the largest banks. These
latter institutions, on the other hand, had placed almost 34 per cent of their earning assets in Treasury
bonds, whereas the smallest banks reported only 27 per cent of their total earning assets in that form
of investment.
As deposits of the larger banks increased during the war years, the first inclination of these
banks was to invest substantial amounts of funds in Treasury bills and Treasury certificates of indebtedness. Gradually, however, through their closer contacts with the money market and observations
of market developments, they became familiar with the pattern of rates which was maintained on
Government securities and recognized its full implications. As a result, these banks began to shift out
of bills and certificates, replacing those short-term low-yield issues with Treasury notes and bonds.
When the small banks experienced large increases in their deposits, their first reaction was one of
caution, stimulated perhaps by uncertainty as to the stability of the new volume of deposits. Consequently, they exhibited a tendency to hold a larger percentage of cash funds. However, as deposits
showed no sign of shrinking, but, in fact, continued to increase, these small banks began to move in the
same direction which had been taken by the larger institutions-although not to the same extentand increased their holdings of bills and certificates.
TABLE 4
RELATIVE IMPORTANCE OF INVESTMENTS OF MEMBER BANKS BY SIZE-GROUPS
ELEVENTH FEDERAL RESERVE DISTRICT
DECEMBER 1946
(Dollar figures in thousands)
As Per Cent of
$5001,000$2,000$5,000$10,000- $25,000- $50,0005500
over
Totsl Investments
$24,999
$49,999
$999
$1 ,999
$4,999
$9,999
94 .4
92 .8
86 .6
87.2
United States Governments .....
92.8
89.2
88.7
892
2.1
2.1
0 .7
Treasury bills' ..... . . . ...... ,J.q 13 .2
4.7
2.9
11 .9
7 .0
29 . 1
28 .6
31. 7
22 .0
Treasury certificates' .. ... ...
35.8
32 .1
26 .1
33.4
13
.9
10
.3
12
.3
15.3
15 .8
Treasury notes* . ... .........
6.4
11. 7
10.9
55. 9
65. 0
46.6
52.2
55.4
Treasury bonds· . ....... . ... .
44 .6
44 .3
56 .0
12.8
5. 6
7.2
Other securities .......... . ....
7 .2
10 .8
13 .4
10 .8
11 .3
..
Total ........... .... .... .
100 .0
100.0
• As per cent of United States Government securities.
100.0
100.0
100.0
100.0
100 .0
100 .0
Totsl
.,
..,
90 .8
2 .2
27 .1
13 .0
]..57 .7
9 .2
100 .0
The pattern of loans reported by banks of different size-groups at the end of 1946 reflected principally the character of loan demand which one might expect, inasmuch as the smaller banks in this
district generally are located in predominantly agricultural sections, whereas banks in intermediate
and larger size-groups reflect' a mixed demand for business and agricultural loans, with the former
increasing in relative importance as the bank size-groups increase. Two-thirds of the loan portfolios
of banks in the smallest size-group represented non-real estate farm loans, whereas almost two-thirds
of the loans of the largest size-group were commercial and industrial loans. Consumer loans increased
in relative importance from 10 per cent of the loan portfolios of the smallest size-group of banks to
almost 16 per cent for banks reporting deposits of $10,000,000 to $24,999,999, but relatively were
somewhat less important to banks in the two largest size-groups.
Loans on real estate reflected a pattern similar to that shown by consumer loans, with such loans
being of least relative importance in the largest and smallest size-groups-representing in each of these
groups about' 6 per cent of loan portfolios-and of most importance for intermediate groups-ranging
from about 16 to almost 20 per cent. Loans on residential real estate constituted in the neighborhood
of 50 per cent of total real estate loans for the various bank size-groups, ranging from a low of 47
per cent to a high of 56 per cent; loans on farm land were of less importance relatively as the size of
banks increased, while loans on other real estate followed the opposite course.
Reflecting the much larger growth in deposits than in loans during the past several years, loans
represented a much smaller proportion of deposits at the end of 1946 than on the comparable date
84
MONTHLY BUSINESS REVIEW
in 1939, despite a substantial inTABLE 5
crease in dollar volume. When
MEMBER BANK LOANS AS A PER CENT OF DEPOSITS
measured in terms of total capiAND CAPITAL ACCOUNTS
tal accouhts, however, the inELEVENTH FEDERAL RESERVE DIST RICT
crease in loans outran the addiBank Size-Groups
- - Tota.l Depol!its---Total Capit.a.\
Total Depoeib
1939
1946
1939
tions to capital, with the conse(Tbousands of dollo.rs)
.7
21.0
190 .0
quence that loans as a multiple Under 5.300 . . . . . . . . . ......... .. ... . ... . 42
20 .2
227 .0
35.4
$500 to $999 ... . . . ............. •. ......
249 .0
20. 0
of capital increased signifi- $1,000 to 81,999 ..........•. . . • .. . ...... 32.5
264 .0
30 .6
17.4
52,000 to $4,999 . ... ... . . . . . •. . .•.• . ....
cantly. At the end of 1939 loans $5,000 to 9,999 .. . . .. . . . ...... . . . ... . . . 28. 2
284 .0
19.9
264. 0
19 .8
30 .5
to $24,999 . . .. .. .. . . . . . . .. .. . . . .
of member banks in the Elev- $10,000
320 .0
17 .6
525,000 to 549,999 . . . . .. . •. •.......... . . 24 .4
338. 0
31.4
enth District were 31.4 per cent 550,000 and over . . . . ...... . ..... . . . . . . . 35. 1
298.0
31.4
24.5
Total . ...... ... .. . . . .. .. ......... .
of deposits and slightly less than
three times capital accounts, as
compared with 24.5 per cent of
deposits and 4 ~ times capital accounts at the end of 1946.
Accounts1946
176. 0
228. 0
304. 0
341. 0
435. 0
397 .0
424. 0
531.0
450. 0
It may be that the relationship of loans to total capital funds is more significant than the ratio
of loans to deposits, especially if considered from the point of view of the risk element involved in
varying degrees in different types of loans. If the loan relationship is measured in terms of deposits,
it will be observed that the smaller banks reflected a slightly more fully invested position than the
larger banks, except in the case of those banks reporting deposits of over $50,000,000. On the other
hand, measured in terms of capital accounts the loan relationship tended to increase as bank size-groups
become larger.
Variations in the composition of the capital structure of banks of different size-groups, although
clearly evident, did not conform to as regular a pattern as was the case with the other financial items
discussed. Considering the capital structure as composed of capital stock, surplus, and undivided profits
and reserves, the data reveal that capital stock represented the largest element in the capital structure
for banks in five size-groups but that surplus accounts exceeded capital stock for banks in the
remaining three size-groups. In general, capital stock represented a smaller proportion of total capital
as the bank size-group increased, while t he opposite was true with respect to surplus accounts.
Undivided profits and reserves represented the smallest proportion of total capital in the case of the
banks of the smallest size-group, which reported undivided profits equivalent to 13.5 per cent of total
capital. That item increased in importance to represent more than 26 per cent of total capital for banks
in the size-group of from $5 ,000,000 to $9,999,999 deposits but then declined in relative importance
through successive size-groups. Approximately 18 per cent of total capital of the 20 largest banks in
the district, considered collectively, was represented by undivided profits and reserves.
TABLE 6
CAPITAL STRUCTURES OF MEMBER BAN KS
ELEVENTH FEDERAL RESERVE DISTRICT
DECEMBER 1946
Bank Bize-GrouPEI
--.,--AJ Per Cent or Total- -Total Depor;it.
(Thousands of dollars)
Capital Stock.
Surplus
Undivided Prof.
ita und Reserve.
Under $500 . . ... . .... ... .
$500 to 999 ........ . ... . .. .
$1,000 to $1,999 .... . .... . . .
$2,000 to $5,999 ........... .
$5,000 to 59,999 .... ... . . .. .
$10,000 to $24,999 ...... . .. .
$25,000 to $49,999 . .... • ....
$50,000 and over .... . . . . . . .
58.2
52.5
H.l
38. 1
36 .0
38. 2
35.4
39.4
28 .3
30 .8
34.5
37 . 1
37. 7
35.6
42 .8
13.5
16. 7
21.4
24.8
26.3
26.2
21.8
42. 7
17.9
It will be observed from Table 6 that capital
stock as a percentage of total capital funds varied
only slightly among the five largest bank sizegroups-ranging between 35.4 and 39.4 per cent
-but that the ratios reported for these groups of
banks were substantially smaller than those reported by the three smallest bank size-groups. This
condition probably is explained by the minimum
capital requirements of small banks which may
tend to make their capital stock account comparatively large in relation to other capital items.
Total capital funds of banks in small size-groups represented a larger proportion of the total
deposits and of the risk assets of those banks than was true for larger bank size-groups. For several
MONTHLY BUSINESS REVIEW
85
years there has been considerable discussion as to the validity of measuring capital funds in terms of
total deposits, inasmuch as it is contended that the risk element is not present in deposits unless the
deposited funds are invested in some form of earning asset. It is the investment in earning assets which
introduces the element of risk, not the acceptance of the deposit. Consequently, the position has been
taken by an increasing number of students of the question that if capital is to provide a buffer of
protection to depositors the adequacy of capital should be measured in terms of those assets of the bank
which have inherent in them some degree of risk. Such risk assets are considered usually to consist of
total assets minus cash, cash balances, and Government securities. On that basis it is seen from Table 7
that the smallest size-group of banks held capital funds equivalent approximately to one dollar for each
two dollars of risk assets. The capital funds underlying risk assets tend to decline proportionately as
the bank size-group increases and reaches a low point at approximately one dollar of capital for each
six dollars of risk assets in the case of banks in the size-group from $5,000,000 to $9,999,999 and in
the $5 O,OOO,OOO-or-over group.
It should be emphasized, however, that even though this measure may represent some improvement over a former standard, i.e., the capital relationship to total deposits, it should not be considered
as providing a generally accepted standard of measurement for capital adequacy. There are variations
in the element of risk involved in different types of risk assets, and therefore it is doubtful whether
adequacy of capital can be measured except by a thorough analysis and evaluation of the risk assets
of the particular bank, with the element of risk involved being related to the amount of capital funds
underlying the composite risk to determine whether or not the position is sound. In the final analysis,
the most important factor determining adequacy
TABLE 7
of capital of a bank as a "going-institution" is the
ability of its management. Unless bank manageMEMBER BANK CAPITAL FUNDS RATIOS
ELEVENTH FEDERAL RESERVE DISTRICT
ment is efficient and capable, the element of risk
DECEMBER 1946
involved in the operation of a bank is simply too
Bank Sizc-GrouPl$
,-{Ja~~~funrl8asJ:dC~~;great. Only by sound and alert management is it
Total Deposita
Deposits
(Tbouaands of uollara)
possible to cope with ever-changing economic con11.9
49.2
Under $500 .... . . . . ...... .... .
ditions and with the problems of growth or the 5500 to $999 ....... . .. ..... . . . ...... .
35.0
8.8
6 .6
25.7
structural and operating changes which evolve with $1,000 to $1,999 .... . ........ . ....... .
21.9
5.1
$2,000 to $4,999 ... . ... .............. .
the passage of time. The difficulty of measuring $5,000 to $9,999 ..... . . . ..... . . • . ... . .
4.6
16.9
such subjective and intangible qualities, of course, $10,000 to $24,999 .... . . ........ . .... .
4.9
18 .1
4.1
19 .6
tends to stimulate the search for an infallible and $25,000 to $49,999 ....... . .. . ..... . .. .
1;50,000 and over .. . ........ . .. . . ... . .
6.0
16.9
simple standard, but unless such standard reflects
the quality and changing character of a bank's
managerial ability, it probably will fall short of the desired objective. This is the reason for the suggestion that greater consideration be given to the analysis and proper evaluation of bank assets in
order to determine satisfactorily the element of risk involved.
Net profit after taxes during 1946 for banks as classified in the different size-groups ranged
from seven per cent on total capital funds for the banks of the smallest size-group to a high of over
13 per cent for banks in the size-group reporting deposits of from $2,000,000 to $4,999,999. The
20 largest banks in the district, considered collectively, reported net profit after taxes of 10.5 per cent
in terms of total capital funds. Very favorable profits were reported also by all groups reporting
deposits of $1,000,000 or more. If net profit after taxes is considered in terms of total assets, reflecting
the profitability of the use of the total resources of the banks, the reports show that the smallest banks
enjoyed the highest rate of return. The three small size-groups reported seven-tenths of one per cent
net profit after taxes in terms of total assets, whereas banks in other size-groups reported one-half
of one per cent and six-tenths of one per cent as their earnings on this basis.
MONTHLY BUSINESS REVIEW
86
Review of Business, Industrial, Agricultural, and Financial Conditions
DISTRICT SUMMARY
In terms of dollar volume, sales of department stores and furniture stores in this district during April and for the first four
months of this year were running slightly ahead of the pace set
a year ago. C ustomers are reported as becoming increasingly
critical of high prices and notably more exacting and selective
in buying, but sales figures indicate that they are still spending
at a rate commensurate with the highest level of disposable income in regional and national history and are obligating future
income through an expanding use of credit. Measured by the
number of persons employed, activity in the building industry
in Texas established a new postwar mark in April; but if the
substantial decline in value of new contract awards which has
been in progress since January continues into the summer, it
may bring an unwelcome cutback in construction employment.
The lag in volume of contract awards seems to be due mainly
to present high costs of building materials and construction, and,
in lesser degree, to unbalanced supplies of building materiab,
government limitations upon nonresidential construction, and
scarcity of skilled craftsmen in some localities. Daily average
production of petroleum in the district during April was only
slightly below the all-time peak attained in June and July of last
year, and preliminary estimates for May indicate that a new production record may have been established. Ranges, livestock, and
growing crops, which had been retarded by lack of moisture in
some parts of the district and by cool, wet weather in other areas
during April, made good progress throughout most of the district in the first half of May, due to generally favorable temperature and moisture conditions. The Texas wheat crop made such
rapid improvement during April that the United States Department of Agriculture forecast the total yield on May 1 at an a11time record of more than 112 million bushels and 20 million
bushels more than had been forecast a month earlier.
BUSINESS
Due to the coming of Easter in the early part of the month,
department store sales in April experienced the stimulus of only
the final week of pre-Easter shopping but suffered the full effects of the seasonal post-Easter slump in soft-goods trade. It
was March this year and April last year which benefited most,
in the matter of sales, from the varying incidence of the Easter
season. Nevertheless, total sales of monthly reporting department stores in the Eleventh District in April this year showed
a moderate gain of three per cent in dollar volume over those
of the preceding month as well as of the same month a.year ago.
By way of comparison, sales in April 1946 were six per cent
above those of the previous month and 53 per cent greater than
in the same month of 1945. Cumulated sales of these stores for
the first four months of this year exceeded those of the same
months last year by eight per cent. A year ago cumulated sales
for four months were running 27 per cent ahead of those for the
same months in 1945. These facts suggest that the rate of increase in dollar volume of sales is leveling off.
Recent weekly reports of department store sales show that
the bottom of the post-Easter slump, reached in the third week
after Easter, was followed by a sharp seasonal upturn in buying
which raised sales during the first and second weeks in May to
10 per cent and 13 per cent, respectively, above the totals for
the corresponding weeks in 1946.
Sales of reporting furniture stores in the district showed a
moderate gain in April over those of the same month a year
ago, but were slightly below those of the previous month. The
ratios of cash and credit to total sales were unchanged from
the preceding month and stood at 17 per cent and 83 per cent,
respectively, as compared with 24 ·per cent and 76 per cent
in April of last year.
Most of the increase in the value of department store and
furniture store stocks in this district at the end of April as
compared with the same date last year seems to have been the
result of an enlarged flow of goods from suppliers to retailers
during the summer and fall of 1946, although some of the increase resulted from rising costs and valuations of merchandise
received since the end of price and wage control. In recent
months, numerous steps have been taken by most retailers to
prevent top-heavy accumulation of stocks, with the result that
end-of-April inventories at district department stores and furniture stores were slightly less than at the end of March. These
sters have included selective price markdowns on slow-selling
merchandise, cancellations of orders past due, highly selective
ordering, over-all reductions in orders outstanding, ordering on
short-term commitment, and partial ordering in advance of a
season leaving room for fill-ins at lower prices as the season
approaches.
WHOLESALE AND RETAIL ,'RADE STATISTICS
Percent:1g6 change in
Number
01
Retail trade:
rerr~!ng
Department st-ores:
48
Total UtA DisI.....
4
~~~.~ti:::::
7
4
Fort Worth ........
7
Houston . .... . .....
San Antonio .. . . ...
6
Shrenpon, lA .....
3
18
Other cities . .. .. ...
Re~il furniture:
Total lith Dm! .....
48
4
Dallaso .. .........
7
Houston .......... .
Port Arthur . . .. ...
3
4
San Antonio .. .....
Wholesale trade;Machinery. eqp't &:
3
supplies ...... . . .
Automotive supplies
6
Drugs ...... ,., ... .
4
22
Groceries . .. .. . . ...
Hardware ........ .
9
Tobacco &: produeta.
6
Net-sale!
April 1947 from
April
Much
1946
+3
+2
+3
-1'4
+10
+1
+6
1"7
+3
-3
-1
+8
- 1
+9
+4
+8
+6
-6
-6
+4
+18
-3
-2
-Q
-Q
+3
+34
-1
+Q
+12
+26
+6
-I
+2
-6
-7
+6
+3
-3
Jan. I to
Ar~~Oi9~O:7
+8
+13
+3
+6
+16
+9
+3
+8
Stockel
April 1941 from
April
March
1946
1941
-I
+ 67
+ 78
+2
+63
+1
+ 69
+2
-1
+ 76
-10
+26
+·67
.+"i"
+ 89
+ 98
-I
-t·97
+"36
-3
+10
+18
+3 1
+122
Q
-
+1
+oi
-I
+7
+2
"Compiled by UDited Stat.. Bureau or Genial (wbole.plo trade fiiUre8 preliminary).
tsioeka a$ end of mouth.
tllldicata change lees thau oD&-h3lr of one per rent.
INDEXES OF DEPARTMENT STORE SALES AND STOCKS
Daily
April
District . ... .
DalIaa ......
Houston .... .
1947
3.7
326
3.6
&Ver&illl
aahllt-(I935--1939-100)
Un.a.dju.ted'
March February
IM7
IM7
337
306
307
330
351
306
April
April
1946
337.
335.
333.
IM7
377
354
360
Adju"ed
March Ftbruary
1947
1"7
347
347
340
340
319
305
April
1946
3li6r
363r
336.
Stock>-(193H03Q-IOO)
_ - - - Unadjustcd"----,-----Adjusted- -- - April
March February April
April
March February April
1947
1947
IQ47
10.6
11>17
1947
1947
IQ'6
District.....
317
326
306r
· Unadjusted for JeaIOn&1 nriatioD.
203r
326
343
343
200r
r-llevi>ed.
The relatively narrow margins of increase in department store
sales achieved in April and other periods this year over comparable earlier periods are impressive chiefly for. the evidence they
afford of a continuing, though slackening, upward trend in the
total of consumer spending in spite of widespread complaints
about prices. With national and per capita disposable incomes
at the highest levels in history, consumers appear to be venting
their displeasure over prices more through increased selectivity
in buying and emphasis upon supplying basic needs than through
MONTHLY BUSINESS REVIEW
any over-all reduction in the amount of their expenditures,
Analyses of sales by types of merchandise in department stores
and in other lines of trade indicate that resistance to high prices
has checked sales volume mainly in luxury articles and in those
items in which consumers' stocks have already been substantially
replenished, such as women's and children's apparel and men's
furnishings and sporeswear, Money not spent for these goods
appears to have been shifted, for the most part, to other types
of merchandise rather than to savings, Some necessary soft goods
still in short supply, for example, men's clothing of standard
quality, arc reported to be selling rapidly despite high, or even
rISing, prices, l'urchases of food, at the highest price level in the
nation's history, h ave risen to an estimated 42 per cent of the
expenditures of moderate-income families, as compared with
33 YJ per cent before the war. Home furnishings of the better
type, major household appliances, and automobiles are still supported by a backlog of effective demand apparently sufficient to
overcome a considerable amount of resistance to high prices
among consumers whose liquid savings and current incomes
keep them from being priced out of the tnGrket, The result is
that with rising output of automobiles and other important consumer durables the volu,me of sales of these goods is still on the
increase, and the ratio of spending for durables to total consumer expenditures is returning to the prewar pattern, Thus,
on the whole, it seems that current high prices are not resulting in any general strike by consumers against buying or spending per sa, with a concomitant increase in savings, but rather
in a revision of the shares of total consumer expenditures going
to different types of goods,
The unstable relationship between consumption and production may not continue indefinitely, however, for the number
of units of durables, including housing, and other wanted
goods, even food, which consumers can or will purchase at
prevailing prices in coming months may fall below the volume
of farm and industrial output necessary to sustain employment
and consumer income at present levels, There are signs that a
large, indeterminate group of would-be customers in low and
middle income brackets already has been or soon will be priced
out of the market for optional, though needed, goods, It appears
that either some increases in dollar wages and incomes or
moderate and orderly downward adjustments in prices with resultant increases in real wages and incomes will be necessary to
bring consumer purchasing power and mass consumption into
balance with the rising output of American farms, factories,
and service establishments. The latter alternative, despite its
difficulty, is generally regarded as the preferable development.
87
Department of Agriculture for Texas on May 1 was raised to
112,425,000 bushels-20,000,000 bushels above the April 1
forecast and nearly 30,000,000 bushels above the previous record crop produced in 1944. This compared with the 1946 crop
of 62,916,000 bushels and a 10-year (1936-45) average of
41,287,000 bushels. The yield per acre was estimated on May
1 at 15 bushels, compared with a yield of 10.5 bushels in 1946
and an average of 11.5 bushels. The acreage left for harvest this
year, which is estimated at 7,495,000 acres and only four per
cent below the seeded acreage, is the highest on record. It is 25
per cent above the acreage harvested in 1946 and 10 8 per cent
above average,
Corn developed rapidly in most areas during the first part
of May, after having been delayed during the preceding month
by unfavorable weather, which had retarded the growth of the
crop and interrupted cultivation. Some replanting was necessary, due to poor germination of seed, light frost damage, and
losses from insect infestation in some areas. Grain sorghums
made good progress in southern portions of the district in April
and early May, but were retarded by cool, wet weather in north
central counties and by a lack of moisture in the southern Low
Rolling Plains. Conditions improved! in those areas by the middle
of May, and seeding, which had been delayed for several weeks
in the High and Low Rolling Plains, got under way. The development of oats in some western counties was retarded by lack
of moisture in April; the crop was approaching maturity in
southern areas by mid-May and was well advanced in northern
counties. Rice seeding was nearing completion, and active harvest of flax was started in most lower coastal counties during the
second week of May, with fairly good yields in prospect.
Cotton planting was delayed and growth of the crop retarded
in April by the cool, wet weather which covered northeastern
and northcentral parts of the district, but good progress was
made in all southern areas and the crop developed more rapidly
the first part of May. Fruiting started in extreme southern counties during the second week of May, and chopping was well under way in central and southeastern sections. Planting was interrupted in many northern areas, however, by rains and wet
fields. The emergence of the boll weevil was far below average
in central Texas during the first half of May. No weevils or
punctured sq\1ares were reported from the Lower Rio Grande
Valley count ies in this period, and only very small infestations
of flea hoppers have been found in that area.
CASH FARM INCOME
(Thousonds of dollani)
AGRICULTURE
Ranges and most growing crops were retarded in April by a
lack of moisture in some western, extreme southern, and southeastern portions of the district and by cool, wet weather in other
a~eas. More favorable conditions developed during the first half
of May, and, with the breaking of the drought generally, except
in some far western counties, all parts of the district were fairly
well supplied with soil moisture. Crops and ranges developed
more rapidly, and field operations generally made better progress,
although interrupted in many northern areas by rains near the
middle of the month. The condition of livestock improved as
the result of increased range feeds.
Good to excellent growing conditions prevailed throughout
April and early May in nearly all important wheat-growing
areas of the district. Additional rainfall and lower temperatures
during the second week of May were beneficial to the crop in
the southern Low Rolling Plains, where some deterioration had
occurred from dry, hot weather. As the result of generally favorable conditions, the wheat crop forecast of the United States
_
February 1947
_=-:---,,'Total rece!'pts
_
Receiphfrom_ Feb.
Feb.
Jan. 1 toO Feb. 28
Crepe Livestock- 19.7
1946
1947
19·t6
,"-rizona . . . ........... . . . I 5.761
3.006
Louisiana ... ' ........... .
925
New Mexico ............ .
9,212
Oklahoma .... . ......... .
I 3,114
I 8.875
I 7.04Z $ n. I'1
10,774
3.737
25,007
63.121
27.799
10,747
71.952
154,173
S 19.371
$109,731
$286,822
1242,150
24,691
46.~6G
7,674
5,067
84,619
71.001
Total .. .... ... 1 43.686
183.601
1127,286
Texa! .•................ .
4.678
4.11Z
25,407
26,m
8.638
52.120
Ia5.61 0
-Includel receipts from the sale of ~ve8tock and liyestock products.
SOURCE: United Statell Department of Aa:riculture.
Commercial vegetables made satisfactory growth during the
first part of April. Rains during the middle of the month interrupted harvesting operations in all south Texas areas but were
beneficial to most crops, particularly in nonirrigated sections.
Unseasonally cool weather which followed the midmonth rains
retarded development, and fureher in terruptions of field work
occurred due to general rains. Harvest of beans, cucumbers,
tomatoes, and green corn was started during the last half of
the month, and harvesting of onions and potatoes conrinued ac-
MONTHLY BUSINESS REVIEW
88
tive. Plantings of midseason and late vegetables made good progress on the hghter soils. Favorable weather conditions in early
May permitted uninterrupted field work and benefited growing
crops.
R ange grass made fair growth during April and by mid-May
was plentiful in all parts of the district, except for some former
dry areas in the southern and western section . Cool weather aided
in preserving the subnormal supply of moisture, but high temperatures and wind early in May depleted the reserve. Droughty
conditions developed in some areas during the first part of May ,
but rains falling in the second week of the month relieved the
urgent need for moisture in many Trans-Pecos and western
plateau counties. Most areas reported sufficient moisture at midmonth to assure good early pasture and range feed, but some
southwestern ranges continued dry.
Cattle and calves gained flesh on new range feed and on May
1 were in average condition in all parts of the district except in
some scattered southwestern and far western areas, where continued dry weather and shortage of range feed caused some
shrinkage. Stockmen have culled their herds closely to take
advantage of high prices. Sheep and lambs, which generally came
through the winter in below average flesh, made good gains in
April and on May 1 were reported to be in about average condition. Shearing was nearly completed at that time in southern
plateau counties but was just started in the northern part of
the plateau. All classes of livestock continued to show improvement during the first part of May. The movement of cattle to
pastures in Oklahoma and Kansas was near completion, and
the spring movement of yea rling wethers to market got under
way.
March
1947
60.931
21,200
56.136
88.932
April
1947
37,104
14,630
6.344
29,323
April
1946
31,703
21,991
8.011
77.801
March
HH7
2S,Q73
18.477
6.390
12.851
(Dollars per bundred weight)
H OIlS ... ....... .
Lambs ..... . ... . . .
- - - F o r t Worth- - - - - - & n Afl tonio - -April
April
March
April
April
MUl'h
1947
1946
1947
1!H7
IIM6
1947
$25 .00
$17 .35
$26.50
$23.00
$IG.OO
122 . 2.\
20.75
11l .50
20.00
24.50
17.35
2" .00
23.00
16.25
23.00
17. 50
15 .00
2:i. OO ·
23.75
23.75
16 .50
14 .65
15.50
16. 00
22 . 00
27. 50
17 25
23.00
13.60
15. 75
1600
2200
26.60
2'1.90
14 .65
2".60
22 .50
2... . 00
The seasonal decline in the gross demand and time deposits
of member banks in the Elevent h District continued during
April, when such deposits averaged $5,142, 000,000 , representing a decrease of $30,000,000 as compared with the preceding
month and of $342,000,000 as compared with ·the corresponding mon th last year. The decline f rom the preceding month
occurred in the gross demand deposits of both reserve city and
country banks. The t ime deposits of member banks reflected
a f urther expansion, offsettin g in part t he decline in demand
deposits.
Reserve balances of member ban ks in the district during April
and the fi rst half of May remain ed generally stable at an average
of $750 ,000 ,000 and closely approximated those of the corresponding period last year. The averages of both required and
excess reserves of member ba nks during April showed only
small changes as compared wit h those in the preceding month.
CONDITION OF THE FEDERAL RESERVE DANK OF DALLAM
San Antonio -- - -
COMPARATIVE TOP LIVESTOCK PRICES
Beer steers ....... .
Stocker steel'! ...... . .... .
Heifers a.nd yearlings . .. . .
Butcber l.'O"-S • •••
Calves ......... .
FINANCE
(Thousands oCdollnrs)
LIVESTOCK RECEIPTB-(N.",ber)
- - - F o r t Worth
April
April
1!H7
1046
78.544
Cattle .. .... . , ....... ..
S8.054
15,010
14,S35
Caiv(,8 •.
57 .549
H"", ..
. . . " ... .. .. 61.702
10.1,746
259.019
Sheep .• .. . ..... ...
Varied price movement s were registered in the commodity
markets after mid-April. Prices of corn, oats, and hogs declined
during the latter part of the mo nth but rose again during the
first two weeks in May. Cotton prices rose sharply immediately
after mid-April, underwen t some decline toward the end of the
month, and tended upward during the first part of May. \'V"heat
prices varied within a narrow ,·ange until the end of April but
declined moderately during t he fi rst p art of May. Cattle and
sheep prices moved upward slightly between mid-April and
mid-May.
1~. 50
Cattle and calves moved from Texas ranges to market in
large volume during April and early May, but the movement of
sheep and lambs was far below normal. R eceipts of cattle and
calves at the Fort Worth and San Antonio markets in April
were far above those of the preceding month but slightly under
receipts of a year earher. The movement of sheep and lambs
into these markets in April was considerably greater than in the
preceding month but fell 60 per cent below April 1946. Receipts of hogs were shghtly greater than in March and approximately equal to receipts for April 1946.
Very little change occurred in prices received by farmers during the month ending April 15. Grain sorghum prices advanced
about six per cent; corn prices rose slightly ; while prices of all
other grains and of cotton declined moderately. A small increase
occurred in the prices of cattle, calves, and sheep; lamb prices
were unchanged; while hog prices fen slightly below the record
high of a month earlier. Milk prices declined seasonally. Prices
received for oranges and Irish and sweet potatoes rose mod erately, but grapefruit prices were slightly lower than at the
middle of March.
Total gold certificate I'CSC" CS . . ................. . ..
Discounts (or member banks ...................... .
Foreign looWl on gold . .... . . .. ..•.•...•.•.•.•• ••. .
U. S. Governmen\ securiLiee .•..•.•...•...........•
Total eamioa assets ..............................
Member ba.nk reaerve deposits ......... . ..... . . . . ..
Federal Reserve Notes in 8 Ct U3i circulation ... . .. . . ..
May-15,
1947
S475.03 1
200
719
890.835
89 1.754
749.787
570.481
Mt\v 15,
1946
S476,!H4
1, tH
Anri! 15.
1911
1474,56.
100
as.
1,440
895.880
898,41J4
74 7,266
:;¢d,~2S
900,490
006,988
759,135
57JA 65
T he seasonal decline in the circulation of Federal Reserve
notes of this bank which has been in evidence since the Christmas Holiqay continued durin g April and the first half of May.
On May 15 the total circulation amounted to $570,500,000,
representing a decrease of $3,000,00 0 during the preceding
thirty days. The total circulation on May 15 was approximately
$18,300,000 lower than on the same date a year ago and $56,000,000 below the all-time peak reac hed at mid-December 1945.
CONDITION STATISTICS OF WEEKLY REPORTING MEMBER RA NKS
IN LEADI NG CITI ES- Eleventh Federal Reserve.. District
(Thousand! of dollars)
Totallo&ns &Dd inveatmenta . . . . ...................
Total1oans. .... . ... ......... .... ... .
.
Commercial, industrial, aad agricultu1'811onns....
Loan! to brokers 3nd dealers in securities . .. . . . . .
Other loan! for l>urchaaing or carrying securities. .
Real eatate loaDS .. .. .. .. .. .. .. . .. . .. . .. . .. . . .
loami to banks... ... .....
AU otberloaDI. . . .. . . .. .
........
Total invflStmentl ........... . .. . ....... .. .. , ..
U. S. Treasury bill. .. . . . . . . . . . . . . . . . .
U. S. Treasury certi6cates of indebtedness
U. S. Treasury noin.. . . .
. . ...
U. S. Government bonda (illeiuding guaranteed
Ot~~~~~ritl~~:: :~::::::::::::
............ .
May 14,
1947
11 .\17.548
737,346
491).071
6,408
69,587
61, 782
1,7h2
101,S4G
1,100.202
40, 115
217,116
110,572
146,1 03
30,650
285
R4,824
1,427,023
5S.969
438,IM
215,91l5
645, 5P7
Apri l 9,
19f7
11.825,147
746,948
600,2 14
5,056
60,630
57,62n
962
le7,1.')7
1,078,199
39,545
210,51 5
100,244
637,981
83,914
400.080
240,34 7
1,491 .356
332.040
46.993
494.267
1.000
'lDalllda all demand deP"lsib otber th:l'l interbank Rod United St.a.tea Government, less
cub items reported at on hand or in process of colleetion.
Reserves with Federal Reserve Bank ..
Balances with domlltJtie banke ....
Demand deposit.e--ndjusted · .
Time deOO8lte. . . . . . . . . . . . . . . .. ..... . . . ..•.• . ...
United States Government depollita.. .. . ...... . . . .
Interbank deposits.. ... . . .. ... . ..... ........... .
Borrowinp from Federal R.csen·c 133nk ... . .. .
645.565
86,834
3nB.241
250,639
1.520.016
334.2,\6
34.278
492.092
None
1hy 1:') ,
1!H6
$2.11 0,988
683.065
405, 131
7.066
68,3~8
399.2C6
235,690
1,431,899
303.542
357.382
555,810
1.000
89
MONTHLY BUSINESS REVIEW
DEB[TS TO [ND[VIDUAL!ACCOUNTS
New Member Banks
(TboUSBl1ca of dollars)
April
Abilene •• ..•... • ....•... S
Amarillo .. • ....... •...•.
Pctg.chaD~
1E~~
1947
95,572
72,345
65,i72
8,245
786.0 8
96,430
278,844
57,697
752,618
16,807
46.905
25.310
28.993
11.986
22,928
227,911
101,774
23.280
52,017
31,784
45,075
42,633
22,901
54 ,442
84,142
5',627
67,564
7,402
699,336
79,546
209.835
50,697
624,524
15,495
38,599
22,472
25.865
11,.24
23,929
201,146
86,752
20.489
46,889
31,021
37,193
37,912
Total-2t citiN .••.•.••.• $2,093,155
12,656,192
Au.!Itio .• • . . •.• . •..•. ,' ,_
Beaumont ... .. . .... .....
Corpus Christi ...........
Corsicana . .........•....
Dallaa ....•...•...••...
EIP.... ............ ....
Fort Worth ..............
Galveston ..... . .........
Houston .............. , ..
lArtdo ..................
Lubbock ................
Monroe. La ........• .•. ..
Port Arthur . . ...........
Rot.... eU, N. M•...........
Sao ADitio. , ........ . .•.
San Aot-onio •.. . . . . . . . ...
Sbrneport, l.a.. • .. . • • • •••
Texarkana·, .. . . . . . . .....
TUCMlD, AnI ••.•.•.•.•.••
~~:::::::::::::::::::
Wichita Falla . .. .........
27.158
71,953
- - -.
Pctg.ohangc
OYer rnnntb
March
ont year
1947
26,931
72.164
+19
+32
+H
+30
-3
+11
+12
+21
+33
+14
+21
+8
+22
+13
+12
+5
-4
+13
+21
+14
+11
+2
+21
+12
+1
- j
-3
+1
+2
- 6
+ 4
-1\
+ 6
-6
-j
-3
-2
-9
+ 1
98,92S
71,440
64,207
8,816
763.893
108.671
266.969
00.496
765.418
17.314
47.756
27.886
--+17
28.758
12.015
23.086
221.969
113,146
23,203
54,316
32,733
45,676
42,713
- I
-I
+3
-7
+1
-4
-3
-I
-I
' 2,977,411
The Boswell State Bank, Bos-well, Oklahoma, was ad-·
mitted to ,,,embership i" the Federal R eserve System on
April 28, 1947. Tbis bank, which ojxmed for business as
a pri1nary orga"izatum O1t April 14, 1947, has total capital funds of $40,000, including capital of $25,000, mrplus of $12,500, and nndivided profits of $2,500 . Its officers are: Chas. Hassi"g, President; G. R. Brown, Vice
President; a"d V erlf Robertson, Cas mer.
The Citize1tS Stale Bank, Ysleta, Texas, a newly orgttnized imfilnUon, opened for In/siness as a member of the
Federal Reserve Systl!1" on May 1, 1947. This bank has
total capital funds of $75,000, incl1uling capital of $50,000, surplus of $15,000, and nndivided profits of $10,000. Its officers are: O. T. Parker, President; Frank B.
Howard, Vice President; and Forrest W. Cooper, Secretary.
+1
-'Deludes tbe figures of two banks in Te.mruna. ArkallSl!.located in the Eighth District.
New Par Bank
fCbanlc leu than one-haIr of ODe per cent.
GROSS DEMAND AND TIME DEPOSITS OF MEMBER BANKS
Elevent.h Federal Reacrve District
(Average or daily figures in thousanda oC dolll.n)
Combined total
G~
Reeerve city banb
Country bJOU
--------------------G~
demand
Apr!l
1945 . ..... ... $4,009,267
Apnl
1946. ....
5,012.062
December 1946 . . . ....... 4,837,618
January 1947 .......... 4,786,948
February 1947 . ... ...... 4,669,675
M",ch
1947 .......... 4.6:.4,'52
April
19t7 . . . . . . . ..• ,617,5.0
Time
demand
G~
Time
demand
On May 15,1947, the First State Bank, Premo"t, Texas,
a newly orga"ized nonml!1l1ber ba"k located in the Elevmth Federal Reserve District, opened for business and was
added fo the Federal Reserve Par List Ott the slime date.
This bank has capital funds of $52,500, mcluding capital
of $3>,000 and $17,500 in sur/)lus ami nndivided profits.
Its officers are: C. Woodrow Laughlin, President; Frank
B. lloyd, Vice President; H. J. MosseT, Vice Presidmt;
and Earl C. Gilmore, Vice Presidmt a"d Casmer.
Time
1380,5S5 12.030,429 1242,778 12.008,838 1137.807
472.155 2,520.721 300.908 2.491,341 171,247
606,672 2,323,619 321,379 2.m.90g 18.1.293
510,9.16 2,203,445 325.735 2,493.503 185.221
514,396 2.218,668 327,017 2,431,007 187,379
517,295 2,223,418 326,&93 ~.429.034 It.O.602
624,iIM 2,208.463 330.604 2,409,086 1:'3.761
MEMBER DANK RESERVES AND RELATED FACTORS
Eleventh Federal Reserve District
(MilliotlJ of dollar.)
Changes in weeks endet!
Gross deposits of weekly reporting banks in the district increased $16,000,000 during the five weeks ended May 14, 1947,
reflecting an expansion of $31,000,000 in adjusted demand and
time deposits which more than offset the decrease of $15,000,000 in Government and interbank deposits. During the period,
these banks added $10,300,000 to their balances with correspondent banks but reduced their reserve balances with the
Federal Reserve Bank by $7,800,000. The net gain in available
funds was utilized to increase total loans and investments by
$12,400,000.
SAVINGS DEPOSITS
Reporting Danks-Eleventh Federal Reserve Diltrict
April 30. 1947
-- ---~----
Number
reporting
baob
BcauUlon ..
Dallas .
EIPa.so .. .. ..........
Fort Worth ............. .
Galveston .
Houston.
.
Lubbock ... . . . . . . .
...
Port Arthur .. . . .
San Antonio .... . ... . ....
Shreveport, L&. .. . .. .. .. .
Waco ........ ···········
Wichita FaUS ... .........
All other ..... ......... . .
Tow ...........
... .... .. .. ...
.. .......... ...
..........
Number or
8Ilvings
depositors
Percen~e
savings
Amount of 8lwings
April 30.
deposit..
1946
56
12.366
132,888
33,132
42.371
26,365
105,867
1,093
5.969
40,291
32,723
9,790
7,016
63,228
$ 7,151 ,468
77.575,681
23.838,430
34,493.842
20,997.822
70,794.628
1,627,196
5,317,611
46,363,775
26.476,856
9,681.610
4,619,303
54,072,210
- 8. 1
+10 . 1
+ 6 .2
+ 8.8
+ 5 .6
+ 2.7
-35.l
- 3.3
+ 9.9
+ 3.2
+ 8 .9
- 2.6
+ 8.1
102
613,09Q
1383,010.432
+ 6.2
3
8
2
3
4
8
2
2
5
3
3
3
change in
eposit8 from
March 3t,
1947
- 2 .9
+ 0.7
- 0 .3
+ 0 .3
+ 0 .2
+ 0. [
-16 .5
- 0 .2
+ 0 .1
+ 0.3
+ 0 .01
- 0 .3
+ 0.4
--+ 0.1
May 14. May 7,
1947
1947
Federal Reserve Creditlocal, ................. + 6.6 -11.6
Interdistrict commercial &
finucial trao.aact.ion!. .. - 3 .8 -17 . 4
Treaaur~' operations ..... .
g.2 +23.4
Currency transactions .....
2.5 - 2.2
+
Ot}:de'!!F~~;et~ank..
+
......
5weck.s
ended
Apr. 30. Apr. 23, Apr. 16, May 14,
1947
+ 0.1
1947
+ 7.4
1917
-3.1
-7.5 -19.6 -21.3
+14.8 + 4.8 + 3.8
0.5
+ 3.9
-69. 7
+56.0
+ 4 .7
1947
-u
+
+ 0.4 -
Other Federal Rewrve
Accounts ....•.. . ..... . - 0. 1 Mcmbfr bank re.serve
balances .• . •.... . ...... +14 .6 -
Cumulative changes
0.5
+ 0.3
+ 0.3
0.1
+ 0 .6
7.5
+ 8.0 -20.4 -
+ 0.2
5.7
Jan , I to
MIIY 14.
-
UI47
2.5
-305.2
+228.4
+ 46.7
+ 0.5
+ 0.6
+
0.5
- 1\ .0
-
32. 1
Note; AmounLa preceded by a minus sign reduce reserves; those preceded by
add to reserves.
Q
plus sign
Between April 9 and May 14, weekly reporting banks experienced a further liquidation of $9,600,000 in loans. Commercial,
industrial, and agricultural loans, which had remained generally
steady between the middle of January and the early part of
April, declined $10,200,000 during the five weeks ended May
14. The decrease of $5,300,000 in "all other" loans reflected an
extension of the downward trend in evidence since mid-January.
The upward trend in real estate loans continued during the fiveweek period, when the net expansion of $4,200,000 brought the
total of such loans on May 14 to $61,800,000. This amount was
$22,100,000, or 56 per cent, above the total on the corresponding date in 1946. The investments of these banks increased $22,000,000 during the five-week period, with holdings of all classes
of securities sharing in the increase.
MONTHLY BUSINESS REVIEW
90
INDUSTRY
The general trend of industrial activity in the Southwest is
closely paralleling that in the nation as a whole, where industrial
production has remained on a high plateau 88 to 89 per cent
above the 1935-1939 average, after attaining that record high
level for a peacetime month in January of this year. Employment in manufacturing establishments in the Southwest has
varied little since late in 1946. In Texas, it declined slightly in
March of this year to 325,000 persons, as compared with 330,000 at the postwar peak last December and 294,000 at the
postwar low in February 1946. The number of workers now
engaged in manufacturing in the State is approximately 13 5,000
more than in 1940 but 118,000 fewer than at the peak of war
m anufacturing activity in November 1943.
DOMESTIC CONSUMPTION AND STOCKS OF COTTON-(llales)
Consumption at:
Texas mills ......... .
8S·2.880
United States Mills ..
U. S. 8tocks~nd of month:
In consumi1 estabm'ta ... 2.112.346
Public st8. compresses . . 2.506.678
August 1 to April 30
This sea30n Lust season
141.2116
6.771.882
875.1 24 7.802.~O
April
1946
17.606
813.782
April
1947
March
1947
t6,979
2.387.8.'12
7.605.701
2.257.524
3.354.119
The slight decline in manufacturing employment in Texas
since last December reflects primarily contraction in nondurable
fields, particularly in textile manufacture and food processing.
Some cutbacks in employment in establishments manufacturing
furniture and finished lumber products, and in stone, clay, and
glass products plants also have occurred, but employment in
production of other durables has been steady. Most executives
of manufacturing establishments who have been interviewed in
recent weeks do not expect much change in employment in
their plants during the next few months.
employment in the State, for declines in transportation, retail
trade, service, and medical establishments surveyed by the
Texas State Employment Service have not been offset in full
by gains in utilities, wholesale trade, finance, and government
establishments.
Construction Activity and Construction Costs
Expectations prevailing in the fall of last year that 1947
would be characterized by a rising volume of construction,
reaching perhaps the highest levels of record, have been altered
by recent declines or very minor increases in the value of awards
during a season of the year when substantial expansion of commitments for building normally occurs. In the United States,
the value of awards for construction was only fractionally
larger in April than in January, and for the first four months
of the year was very Lttle greater than during the comparable
period in 1946. In the district, tbe value of awards declined 37
per cent from January to April, but the total was at such an unusually high level in Ja nuary that, despite the subsequent decline,
the total during the January-April period was 14 per cent larger
than during the same period in 1946. The drop in value of
awards which has occurred in the district during the spring does
suggest, however, tha t 1947 may not be the year of intensive
construction activity in the Southwest which had been expected.
vALUE OF CONSTRUCTION CONTRACTS AWARDED
(Thousands of dollars)
April
m7
Eleventh District- totaL ..
ResidentiaL . .. . . .
All otber ....... .
United Stat.cs·-btal. .
Residential _.... .
All o~ber _... . .. .
$ 44.037
18.088
25.949
602.338
256.668
345.870
April
1946
$ 68.42\
March
1947
$ '8.899
33.475
734.911
370.590
384.321
33.984
;96.755
282.8.'11
313.874
~4.94{i
24015
January 1 to April 30
HIH
5 231.419
89.2115
142.124
1940
$ 203.377
2,212,918
\,005,369
1,207,569
83.289
120.088
2.177.404
837,625
1,339,779
·87 states east of the Rocky Mount.ailUl.
SOURCE: F. W. Dodge Corporation.
COTTONSEED AND COTTONSEED PRODUCTS
TeX88
August 1 to April 30
Cottonseed received a.t mill!
(tons) .. ........... ........
Cottonseed crushed (tons) ... . .
Cottonseed on hand April 30
(tons) ..
Production of products:
Crude oil (t-housond lbs.).
Cake and meal (tons) ..
Hulls (tons) ...........
Linters (running bales) ..
Stocks on hand April 30:
Crude oil (thoUBand 1M.). _.
C'\.ke nnd meal (tons) . . .
Hulls (tons) .... . ......
Linters (running bales) ..
This season
La.st 8e8son
560.611
595.934
618.125
6110.770
26.931
21.554
United States--Auqust t to Apri130
Thi s season
2.979.171
2.841.022
Last season
3,081,344
3.063.149
255.860
236.543
890.181
g54,772
158,430
1,251,6l'i7
665,393
215,166
911.293
\.348 ••182
734.800
929.037
1.320
12.467
5.791
13.130
125.477
45.858
103.311
14.505
49.982
41.071
57.164
1110.\35
279.877
132.611
203.575
205.\97
3\5.364
2.D94
27.30\1
12.216
16.908
8,173
SOURCE: United States Bureau of CensU!.
In the construction industry in Texas, employment expanded
during the first four months of this year, rising from 78,000 in
January to perhaps 91,000 in April, when a new postwar peak
in construction employment was established. The rate of increase has been lower than expected, however, and further gains
may be less than seasonal, since commitments for future construction have not taken the upturn which usually occurs in
the spring.
Detailed information concerning nonagricultural employment in establishments other than manufacturing plants is not
available on a current basis. In D ecember 1946, such employment totaled 1,047,000 in Texas. This was near an all-time peak
and exceeded the total for December 1940 by 128,000. A somewhat more than seasonal decline in this t ype of employment
occurred in J anuary and February of this YCa(, the tOtal dropping to 986,000. Since then, apparently, there has been less than
the usual seasonal upturn in this segment of nonagricultural
Contractors and analysts of the construction industry generally attribute the slackening of demand to the present high
cost of construction, although they also regard government
limitations upon nonresidential constl"Uction, unbalanced supplies of building materials, and scarcity of skilled construction
workers as hindrances to expansion of constnlction. The rise in
costs, as compared with the prewar period and the early months
following the war, has been quite pronounced. The United
States Department of Labor's index of prices of building materials, which in 1939 stood at 90.5 per cent of tbe 1926 average,
and at 118.3 in October 1945, rose to 177.5 in March 1947,
indicating an increase of 97 per cent in the average cost of building materials from 1939 to the sp ring of this year. Prices of individual building materials have risen at widely divergent rates,
INDEXES OF WHOLESALE PRICES OF DUlLDING MATERIALS
(1926-100)
Paint &: Plumb·
paint
inlJ; and
Lumber materials he:!.ting
All
building
material!!
Brick
tile
Cement
March 1947
1947
177 .5
174 .8
Jan.
1947
19.6
194ij
169.7
157 .8
145 .5
1'34 . 8
112.3
109.9
108.3
106 9
107 .0
108.5
280.3
26.1.6
249 .9
227.2
1946
132.4
lR2.3
132.2
130.0
129.1
127.8
122.9
104. . 1
101.7
90 . 4
95 _8
91 .>;
Feb.
Dec.
Nov.
Oct.
1946 average
1945 average
1944 averng'!
1M, avenll!:O
1!l42 avertge
1941 average
1940 average
1939 averap:e
132 t3
ao~
117 .8
115 .5
1)2.4
111 <I
99 1
OM 0
93.7
90.5
91.4
1 10 . ~
103 .2
94 .8
90.5
91 0
176.1
J7::\.9
171.2
155.4
151.3
117.0
110.2
107.2
178.4
155.1
118 . 5
103.3
10.; . 2
141.4
102 .3
103.8
93.4
92.2
PO.7
95.4
8'.8
1!l2.1
178.9
106.9
13:1. n
100 . 3
f.2 .0
]22 .5
00.8
91.3
102 . {I
93.2
91.4
85 .7
82.H
Struc·
Other
tural
bai'din~
steel materinl.s
127 . 7
114.9
120.1
141.5
1a9 .0
131 .8
\07.2
120.1
120.1
122.5
117.1
"".4
79.2
SOURCE: Bureau or Labor Statistics, U. S. Department of Labor.
127.1
118.4
107.3
101.3
107.3
107 3
1073
107.3
\07.3
12.').3
m.6
\04.4
lO:Ll
102.0
'103 oS
98 .3
93.3
90 .3
MONTHLY BUSINESS REVIEW
the average price of lumber increasing 190 per cent between
1939 and the spring of 1947, whereas the price of cement increased only 23 per cent during that period.
Increased labor costs, reflecting higher wage rates and fluctuating productivity, delays in receipt of materials, shortages
which require use of expensive substitutes, and difficulties which
have accompanied the procurement of labor and the initiation
of new projects have also contributed significantly to rising
construction costs. As the accompanying table indicates, awards
AVERAGE VAl.uE PER SQUARE FOOT OF CONSTRUCTION CONTRACTS
AW},RDED-TEXAS
Residentill
building
16 .68
6.45
5.66
4.39
3.84
3.96
3.62
3 .20
3. 10
3.26
• Ineludea maior alteratioM in exiatiog structures.
JSlllUlry. Mnrch 1947 ... ....... . ............ . . .
Octobcr·Decembf:r )046 ........•....... . .... , .
lY4G . . . . . . . . . ........... . .•••. •.•.•.•.•.•.•
1945 . ... . . ........................... .... •
1944 .............................. .. .
1943 . .
. ............. .
1942 ..
. ...... . ....... . ........... .
1941. ..... . ....... . . . . .......... .. .. . ......•
1940 .... . ... . . . . . . ....... . . . . . . ... . . . ... . . .
1939 ... .. . . . . . . . . . ... . ..... ... .. . . . .... ... .
NOD residential
buiJding •
16 .29
6 .53
6.60
6.15
5.03
o.e9
4.48
4.09
4.73
4.73
SOURCE: Computed from F. W. Dodge Corporation data.
for construction in Texas during the first quarter of 1947 averaged $6.68 per square foot on residential and $6.29 per square
foot on nonresidential building. These averages were not much
changed from the last quarter of 1946, but were more than
double the average values of 1940 in the case of residential building, and were up one-third in nonresidential construction. These
figures must not be viewed, however, as a precise index of the
actual increases in costs, inasmuch as the comparisons do not
take into account variations in the types of construction undertaken in the different periods. They may understate somewhat
the magnitude of the increase.
BUILDING PERMITS
Percentagf'
-AprHI947- Percentage ehange Jao. 1 to Apr. 30, 1947 chan~e
valuat..ioo
valuation from
Valuation from 194.6
No. Valuation Apr.194.6 Mar.1941 No.
-18
420 1 1.878.838
131 1 1,262.746
+172
+878
Abilene .. . •... ...
626 2.161.733
-3<
179
768.040
+ 27
Amarillo .•...... .
+ 88
-7
1.260 6.OS6.775
+ 38
+ 42
Austin ..... . .... . 410 2,279.<70
1,141
1.400.587
314
368.588
+ 75
- 13
+10
Deallmont .. . . ..•.
- 42
1.498 5.200. 155
+ 92
+44
Corb!!! Chri!!ti ... . 396 1.079.612
16,185,049
25
7
6.170
Dal ........... 1.594 5.166.228
+ 20
+
491 2,360.765
- 18
124
417.095
+ 46
+79
EI Puo ..........
-31
-15
4
2.327 7.828,925
897 1.766.348
Fort Worth .......
-17
-14
- 38
483
753.542
138
129.775
Ga.lveatnn ...... . .
2.531 18.820.678
~3
+ 18
Houston ......... . 689 4.469,386
+ 6
-74
732 8.898,243
683.666
+ 94
+81
LlIbboek. ..... .. .. 187
767.749
-17
-60
- 17
625
116
192.014
Port Arthur . ... . .
-12
-38
- 14
4.494 7.094,901
San Antonio . . . . .. 1.101 1.617.527
-26
1.222 3,578.494
-13
718.032
+ 40
Shreveport, La.... 339
515 2.217.769
147
-26
+53
Waco ...... . .•.•.
'65.134
+23
-25
- 43
248
61
115.790
590.990
+34
Wichita FaJ.l!l .• . •.
-
- - ----
TotaL . . ... 6.620 121 .377.339
+20
-
2
-23.881- 180.073.193
-- - -
-2.
Rising Trends of Demand for Petroleum
Demand for petroleum products during the first four months
of 1947 exceeded expectations, thus repeating the experience in
1946, when consumption rose above forecast demand by a considerable margin. During the war period, analysts of the petroleum industry generally agreed that an upward trend in consumption of petroleum products in the United States would
characterize the two decades following the war. They foresaw a moderate to pronounced decline in petroleum consumption during the first postwar year, however, due to cutbacks in
military demand following cessation of hostilities, and did not
expect consumption to be restored to levels attained during the
war until three to five years after the return of peace.
Such forecasts underestimated the resilience of the civilian
economy. Although demand for petroleum products declined
substantially for a brief period when the major shift from war
to peacetime operations occurred., it regained war levels by the
end of 1945, and during 1946 total consumption of crude oil
and its products exceeded that of any prior year. Rapid mechanical conversion of industry, early return to high levels of industrial and commercial activity, intensive use of passenger automobiles, and a less drastic reduction in military consumption
than anticipa ted have already contributed to a rise in demand
for the industry's products to levels which analysts did not
expect to be attained until 1949 or 1950.
Projections prepared by the Economics Committee of the
Interstate Oil Compact Commission indicate a probable average
demand for petroleum products of 5,700,000 barrels daily in
1947, as compared with the previous record of 5,321,000 barrels
in 1946. The strong demand is being reflected in rising requirements for domestic crude oil. Production of crude oil in the
United States averaged 4,918,000 barrels daily in April 1947,
the highest level attained since the all-time peak in June and
July 1946. Production in the Eleventh District in April was
only slightly below the all-time peak, and outside the district
it set a new record. Preliminary estimates for May indicate that
former peak production both in the district and in the nation
was exceeded, and it is generally anticipated that production
will be increased during the summer in order to meet rising
requirements for gasoline and to accumulate adequate stocks
of fuel oils to meet peak demands next winter.
UNITED STATES DEMAND AND SUPPLY FORECASTS, 1947
(Thousand!! of barreL" daily)
G8301ine •. .......•.......
Ke~ne . ..
Contractors generally indicate that the rise in building costs
may have been arrested, at least temporarily. The rise in prices
of most building materials has slackened somewhat since March,
and the prices of some materials, including lumber and paint,
are reported to have weakened slightly. The price increases in
materials and increases in wage rates which have occurred in
the past two or three months are said to be largely or completely
offset by improved productivity of labor and increasing administrative efficiency, arising primarily from more orderly flow of
materials. If material prices and wage rates should stabilize, contractors indicate that a continued improvement in labor efficiency and a reduction in contractors' margins can be expected to
effect minor reductions in construction costs. Meanwhile, some
prospective builders apparently are delaying the letting of contracts in the expectation that costs will decline precipitously,
as they did during the period of postwar readjustment in 1920
and 1921.
91
. . .. ...... .. .
Di:.tillate fud oil ... .
Rc!lirlU91 fuel oil. . .•... ...
Other ........ •.•.... . . .
Torol demand .. . .... .
Crude production . . . .
Natural gI\8Oline •.. . ..
Imports . ......... . ... .
Total supply ... .... ..
SLook change ............ .
Fint
quarter
2.015
395
1.110
1,540
790
5,&\0
4,7RO
345
470
5,595
- 255
8ccond
qUfl,rU:r
2.380
240
700
1.355
900
5.575
4.960
360
430
5.730
165
Third
qunrkr
2.420
215
610
1.265
960
5.479
5.000
355
440
5.795
325
Fourth
quarter
2.255
360
960
1.460
890
5.905
5.000
365
4fl()
5.825
- 80
Actual
Year
2.267
300
845
1.403
885
5.700
4.932
355
460
5,737
37
1946
2.138
268
746
1.333
836
5.321
4.749
321
370
5.440
119
SOURCE: Economics Committee, Interrrl.ate Oil Compact Commillllion.
The petroleum industry apparently can meet the current increase in demand without great difficulty by expanding production of crude oil in the Southwest. Many fields out side this area
are operating at near their maximum efficient rates of production, and some areas in the Midwest already may have exceeded
those rates ; but production in the Eleventh District, which averaged approximately 2,430,000 barrels daily during May, could
probably be increased to 2,865,000 barrels daily without reducing ultimate recovery from the fields.
MONTHLY BUSINESS REVIEW
92
Existing refining capacity also appears adequate to meet the
immediate requirements of the economy. Operating refineries,
producing at 88 per cent of capacity in March 1947, probably
have an adequate margin of unused capacity to satisfy increases
in demand. Moreover, government-owned refineries not now in
use can be operated if the need for additional refining capacity
becomes acute. Transportation of the increasing flow of crude
oil m ay present some difficulties, however, pending completion
of projected pipe-line projects, particularly in West Texas and
New Mexico, where the petrolcum industry must, for the time
being, rely heavily upon rail facilities to transport additional
quan tities of oil. Moreover, shortage of storage capacity and
delay in transporting products may create temporary difficulty
at refineries during peak operations.
CRUDE OIL PRODUCTlON-(D....-.I!)
Apri11947
Total
Dailyavg.
productionTo production
DiBtric;l 1 .. "" .. . , .... . ....
2 . .•.•.•.•.•••. •.. ..
3 ............... ... .
4. ........... . ... ..
6 ........ , ... , ......
6.... .... ,. ,.,., ••• •
Other 6 ... .... . , .. ... .....
7b .. ....... .. .......
70 .. ............ ... .
8 .. ...... .. ..... .. ..
9 .. .. .. .. ...........
10 ...................
622.400
4,741.150
14,437,450
7.260,350
1,1 42,400
10.006,150
3.346.000
1,IJO,150
1,086,600
14.1102.850
4,Oi4,550
2.546,s.so
Total Texaa . .. . ... . .. .. ... 64.975,900
New Mexico ... .............
3,098,400
North Louisiana ........... . . .
2.883,650
Total District .. ..... ... . . .. 70,057,850
Outside District ... . . ...
76,588.400
United Stntea . . ... . . ....... .. 147,546,250
20.747
158,038
481,248
242,0 12
38,080
333,538
111,500
37,005
36.220
486,762
135,818
84.895
2,165.863
103.280
9tI,1I8
2,365,261
2,652.947
4,91 8,208
JDCrease or decreue in daily
average production from
Marrh 1947
April19f6
+ 210
+ 518
- 4,633
+ 617
151
+19.238
+ 639
+ 647
+ 1.341
+ 12,812
+ 5,707
+ 284
+3i,129
- 1,031
+ 1,147
+ 37,245
+32,059
+69,304
N.A. ·
N.A.
N.A.
N.A .
N.A.
N.A.
N.A.
N.A.
N.A .
N.A.
N.A.
N.A.
+ 148,463
+ 7,485
+ 10,591
+166.539
+117.174
+283.113
-
SOURCE; E8timated from American Petroleum Inatitute weekly reports.
·Not avaibble because of chanitcs in report area.s.
Projections of United States demand for petroleum products
submitted in 1945 to the Special Senate Comm.ittee Investigating Petroleum Resources estinaated a rise in daily consumption to
5,650,000 barrels by 1950 and to 7,200,000 barrels by 1970,
In view of the present strong demand for about 5,700,000 barrels daily, these estimates appear conservative. Whether such a
long-term upward trend of demand occurs depends upon such
variable or unpredictable factors as the rate of population
growth, the movement from rural areas to cities, the level of
employment, the efficiency of motors, and the development of
alternative sources of power. The forces which ma y stimulate
increased consumption during coming decades seem likely to be
stronger, however, than those which could contribute to a contraction of consumption. Domestic demand for motor fuel will
expand as old cars are replaced and the number of commercial
and private automobiles in operation is increased. Shifts from
coal to oil burning equipment by industrial, commercial, and
private users are expected to continue, and expanding mechanization of farms may significantly increase demand for petroleum products. Moreover, the needs of aviation seem destined
to expand, and conversion of maritime commerce to more efficient oil burning equipment is likely to amplify demand.
The increase in domestic requirements will eventually be accompanied by rising consumption abroad. Extensive destruction
of oil using facilities and reduction of living standards in England, Japan, and throughout much of Continental Europe and
Asia may delay the upward movement of foreign demand for
severa l years, but it has been estimated that by the middle
1960's, when United States demand for petroleum products may
approach 7,000,000 barrels daily, world demand may total 12,000,000 barrels daily, or about one-third above 1946 levels.
Expansion of consumption of petroleum products to the degree forecast would require substantial investments in new
transportation and refining equipment, or significant improvement in the technology of crude oil processing. It would also
require far heavier withdrawals from crude oil reservoirs than
during prewar decades. The adequacy of reserves of oil to meet
these expanding requirements is a particularly significant question in the Southwest, where oil production and refining play
highly inaportant roles as sources of employment and income,
Despite extensive knowledge concerning the structure and
location of oil bearing formations, the rate at which new reserves may be discovered in the future is open to dispute. Either
shortage or abundance of crude oil may face the national and
regional economies. Available information suggests, however,
that intensive search for oil will be justified in view of increasing demands. If demand fo r petroleum products in the United
States should continue at forecast levels of 5,700,000 barrels
daily and domestic production of crude oil to meet requirements
should run at about 5,000,0 00 barrels daily, as at present, it
will be necessary to discover 9,375,000,000 barrels of crude oil
during the next five years in ord.er to maintain proved reserves
at the January 1, 1947, level. As the accompanying table indicates, oil discoveries slightly exceeded that amount during the
1935-1939 period and fell sli ghtly below during 1940-1944.
Discoveries during 1945-1946 were at a rate slightly in excess
of 2,150,000,000 barrels annually, which, if continued, would
provide a small surplus over the production mentioned above.
In the Eleventh District, discoveries must total 4,190,000,000
barrels during the next five years to offset withdrawals, if present rates of production continue. Although discoveries fell below that level from 1940 to 1944, increase of wildcatting to alltime peaks since the end of the war and acceleration of developmental drilling have raised discovery rates to about 1,000,000,000 barrels annually, an amount sufficient, for a while at
least, to provide a comfortable margin over projected consumption.
PRODUCTIO~
AND DISCOVERY OF CRUDE OIL
United States
Total oil produced .. . . .. ...
Daily rate of production. ... . .
Total oil discoyered" .
Net addition!. to proved fC9Cn'~ •...
Proved reservo, end of period .
Eleventh District
Total oil prOOuccd . . ..... ............
Dailv rate of production . .
Total oil discovered". "" .......
Net additions to proved m!ervu.
Proved re3efVCB, end of period . . . .
·lacluding revision of estimates.
193&-193P
5,R55,OOO
3.206
10,706.000
4,851,000
18,4ct1,OOO
2.542,000
1,392
6.692,000
4.150.000
11,62. ,000
1940-1944
7,3 26,000
4,012
9,29,,000
20,463,000
1915-1946
3,439,000
4.711
4,3J I,000
892,000
21.345,000
3,142,000
1,721
3.733.000
5!l6.00fJ
12,224.000
1,631.000
2.240
2.127.000
4Q2.000
12,716.000
1,fl70,OOO
SOURCES; American Petroleum TMtitutc; BufCIIU of Mines; The Oil and Gill! JourMI.
Maintenance of discoveries at levels which will offset longterm production demands probably will require intensification of wildcatting and drilling and continuous extension of
exploration to new formations, to g reater depths, and into
coastal waters, where new technical difficulties may contribute
to rising costs of exploration and development. If these efforts
to extend the horizons of exploration are successful, domestic
production may continue to meet essential domestic requirements. Otherwise, the United States may come to rely in part
upon the abundant reserves of crude oil which are being developed abroad with American skills, manpower, and capital.
@FedFRASER