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MONGJrHLGJr

REVIEW
FED ERA L

RES E R V E

Vol. 38, No.3

BANK

o

DALLAS, TEXAS

FEDERAL

RESERVE

In recent weeks most of the direct controls of the Government over business and other forms of economic activity have
been relaxed or removed. Price controls are being liquidated
rapidly. Wage and salary controls have been eliminated, and
allocations and limitation orders are being relaxed. Perhaps
the first step in this direction was taken as long ago as March
1951, when the Federal Reserve System abandoned the policy
of supporting prices of Government securties at par and thus
regained the power to exercise greater control and influence
over the volume of bank reserves and bank credit. Later, in
1952, such direct credit controls as Regulation W, covering
consumer instalment credits, and Regulation X, applying to
new real estate construction credits, were terminated. A few
days ago, direct control over stock market credit was relaxed.
In taking these steps, the Government and the Federal
Reserve System have not disinterested themselves in the
course and level of economic activity. Rather, they have indi cated that in so far as governmental and semigovernmental
agencies are concerned, reliance and emphasis are being
placed primarily and largely upon the so-called general
means of influencing business and economic activity. Fiscal
policies of government relating to taxation, the Federal budget, and debt management, together with Federal Reserve
policies inAuencing the supply of money and credit, now are
being relied upon more heavily. It is believed that if such
basic financial policies are soundly conceived and administered, much can be done toward creating an economic atmosphere in which business can operate with vitality, profit, and
stability and yet retain the freedom of decision that is an
essential characteristic of a competitive private enterprise
system.
The implications of these developments are of much significance to businessmen and bankers. One must admit that
the greater the freedom of private decision on economic matters, the greater is the responsibility imposed on the individuals making such decisions. Standards of business and
finan cial leadership and statesmanship must not be permitted
to be set - or, in fact, even inf3uenced - by the standards
of those whose practices and policies fall in that narrow twilight zone between the sound and unsound, the constructive
and destructive, or the public interest and selfish private in-

F

DALLAS
March 1,1953

BANKING

[erest. Moreover, leadership by a few enlightened businessmen and bankers will not get the job done; instead, there
must be leadership by an enlightened majority.
As our economy has grown in size, the complexities of
economic life and relationships have become much more involved and difficult. The many segments of the economy have
become more interdependent, each with the other_ National
economic policies and actions, either public or private, are
now so far-reaching in their effects that virtually no community or business can insulate itself from their consequences.
This places a greater burden on the businessman of today. It
means that not only must he be competent in terms of his
own business but that also he should seek to understand
those broader economic forces arising in other areas of
economic activity that influence his operations.
One of the more important of these broad areas of economic activity is central banking, or what has come to be
known in this country as Federal Reserve banking. In view
of the greater reliance that is being placed on general monetary and credit measures, perhaps a brief excursion into the
"mysteries" of Federal Reserve banking is pardonable. Furthermore, it is generally admitted that operations in this field
of finance are not too widely understood; therefore, the emphasis given to the subject in this issue of the Review would
not appear to be inappropriate.
The importance and place of commercial banking in our
economic system generally are well understood. Wide use of
checking and savings accounts and the occasional to frequent
need for bank credit accommodations, as well as other services, have brought virtually all businesses and most people
into day-to· day contact with commercial banks. They have
come to know their commercial banker and to realize how
important a commercial bank is in their daily personal and
business lives. It is not particularly surprising, however, that
they have not looked through the commercial banking processes to the Reserve banking processes and operations, even
though the latter influence the character and volume of commercial banking operations and thus affect virtually the entire system of business finance.

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)

34

MONTHLY BUSINESS REVIEW

Actually, very few people or businesses have any direct
contact with the Federal Reserve banks. Seldom are they
faced with a compelling reason to inquire into the services
and operations of Reserve banks. Consequently, the average
citizen - and, in fact, the average businessman - if he
thinks about it at all, probably regards Federal Reserve banking as something which is beyond his understanding, rather
mysterious, and not of particular interest to him in any
event, since he is not especially aware that the policies and
operations of the Reserve banks have a very important, direct
effect upon him or his business.
The Federal Reserve System performs numerous functions
in the interest of commercial banking, the Government, business, and the general public. This article, however, it not intended to be comprehensive in its coverage but is written
merely to feature the principal objective of the System and
to discuss some of the Federal Reserve banking operations
that are designed to help achieve that objective. Also, as a
result of attempting to reduce the explanation of complex and
involved processes to brief, simple statements, there may be
a tendency to sacrifice to some degree technical accuracy,
although any such editorial liberties with the facts of the
case will not be significant. This article is not written for the
professional economist or for the person trained or experienced in Federal Reserve banking; instead, it is intended for
the businessman or banker or individual who has neither the
time nor the opportunity nor, in fact, the need to make an
intensive, thorough study of the subject.
The primary objective of the Federal Reserve System is
to influence the availability and cost of reserves to the commercial banking system in such a manner that their total
volume will enable the commercial banks of the Nation to
supply business, industry, agriculture, and others parts of
our economy with the amount of bank credit that is necessary
to support production, distribution, and consumption at most
desirable sustainable levels without contributing to either
inflationary or deflationary excesses. Perhaps another way
of stating this objective is that the Federal Reserve System
has the responsibility of regulating the Nation's money
supply, with the view toward contributing as much as possible through monetary and credit means to the achievement
of sound, progressive economic stability.
At this point it may be in order to consider the meaning of
reserves as they relate to the commercial banking system and
to the money supply, i.e., bank deposits and currency. Commercial banks are required by either state or Federal laws
to maintain reserves against their deposits. Those banks that
are members of the Federal Reserve System - almost 7,000
commercial banks, holding about 85 percent of the Nation's
banking resources - are required by the Federal Reserve
Act to keep on deposit with their Reserve banks an amount of
funds equal to certain percentages of their deposits. The requirement against demand deposits of member banks in the
reserve cities of Houston, Dallas, San Antonio, Fort Worth,
and El Paso is now 20 percent; in all other cities and towns
in the Eleventh Federal Reserve District the requirement is
14 percent. In addition, a reserve of 6 percent of time deposits is required of all member banks, regardless of location.

In certain respects, the reserve account of a member bank
carried on the books of a Reserve bank is comparable to the
deposit account of a business or an individual on the books
of a commercial bank. The member bank can build up its
account in approximately the same way that businesses
build their deposit accounts - namely, through deposits of
currency, coin, and checks against other banks and the proceeds of borrowings. Both reserve accounts of member banks
alld the deposit accoun ts of businesses are nonearning assets,
since they represent uninvested funds. Moreover, just as
businesses use their deposit accounts, so do member banks
use their reserve accounts. Reserve accounts are not idle,
unused balances, from the standpoint of the member banks_
For instance, reserve funds are used in the settlement of adverse balances with other banks or perbaps to enable a member bank to obtain currency from its Reserve bank. Unlike
the business firm, however, which can liquidate its deposit or
maintain it at a level of its own choice, the member bank
must be sure that it maintains an average amount in its aCcount over the reserve computation period of a week or a
half month, as the case may be, that will equal its reserve
rcquirement.
Turning to the commercial bankillg system, its loans and
investments create deposits which, in turn, must be backed
by a certain percentage of reserve funds. Therefore, if the
banking system as a whole does not have or cannot acquire
unused reserve funds - i.e., excess reserves - it cannot expand the total volume of loans and investments. If it cannot
do this, then it cannot increase the volume of bank deposits
and, consequently, cannot increase the money supply, which
is made up 50 largely of commercial bank deposits. Of COllrse,
existing deposits shift between commercial banks, with some
banks gaining and others losing funds; ill fact, there is a
continuous flow of bank reserves from bank to bank. This
flow or transfer of fWlds, however, does not change the total
reserves of the commercial banking system. Whereas one
bank losing reserves may find it necessary to contract its
loans and investments, other banks gaining reserves will be
able to expand credit. The potential supply of bank credit
available to business, industry, and agriculture, however, remains unchanged, notwithstanding these shifts in deposits.
From the foregoing, it is apparent that member bank reserves are the basis of our system of commercial bank credit
and of the money supply. The supply of reserves of the commercial banking system is influenced primarily by three factors: first, the expansion or contraction of Federal Reserve
credit; second, imports and exports of gold; and third, the
increase or decrease in currency circulation. Although the
latter two factnrs are largely independent of Federal Reserve
policy, the System, if desirable, can offset the effect of gold
or currency movements upon bank reserves, it can prepare
the way for such seasonal or othcr movements as can be
anticipated, or it can initiate such independent action with
respect to the volume of bank reserves as may seem appropriate in terms of economic conditions prevailing at the
time.
Several conclusions may be sU1mnarized frolll this discussion of bank reserves.

4

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4

•

MONTHLY BUSINESS REVIEW

35

first, the commercial banking system as a whole cannot increase its total volume of loans and investments
unless it possesses or can obtain excess reserves to be
used to meet the reserve requ irements against the bank
deposits that are created by the expansion of bank credit_

and advances to its memher bankS, thus creating reserves for
the banking system. Also, what limits this reserve creative
power of the Federal Reserve System? Underlying this power
to create bank reserves are the gold certificate reserves of
the System and the powe~ of note i~sue of the Reserve banks.

Second, the commercial banking system, acting independently, cannot increase the total volume of bank
reserves. It cannot control the flow of gold, the movement of currency, or the policy of the Federal Reserve
System.

The note issue of the Reserve Banks - i.e., our most common form of paper money - is hacked by a gold certificate
reserve of at least 25 percent, with the remaining 75-percent
collateral taking the form of Government securities or certain
types of eligible paper which Reserve banks have discounted
for their member banks. Deposits on the books of the Reserve
hanks also are hacked by a 25.percent minimum gold certificate reserve. Consequently, as long as the Federal Reserve
System possesses unpledged gold certificates, it can purchase
or acquire assets through the creation of one or another of
two liahilities - namely, either a deposit liability on its
books to the credit of a member bank or the issuance of currency in the form of Federal Reserve notes. Thus, the factor
limiting the Reserve hanks' ability to acquire assets is the
amount of unpledged gold certificates in their possession.
Moreover, it should be noted that the Reserve banks do not
use member bank deposits in the process of acquiring assets,
such as Government securities or loans; in fact, it is the acquisition of these assets which creates the member bank reserves, or deposits, on the books of the Reserve banks.

T hi rd, althongh the movements of gold and currency
affect the volume of bank reserves, the net change in the
total volume of reserves is the responsibility of the
Federal Reserve System and reAects Federal Reserve
policy with respect to the supply of money and credit_
Fourth, Federal Reserve banking, involving the making of loans and advances to member banks and purchases of United States Government securities, is the
pri ncipal means by which the Federal Reserve creates
new reserves for the commercial banking system and
thus makes possible an expansion of commercial bank
credit. Liquidation of loans to member banks and sales
of Government securities by the Federal Reserve System, of course, extinguish bank reserves, with a consequent tendency to induce somewhat more restrictive
commercial bank credit policies. It also should be noted
that the Federal Reserve System is able to influence reserve positions of member banks, in so far as ease or
tightness is concerned, by changing reserve requirement percentages. An increase in the percentage required against member bank deposits either absorbs
excess reserves or requires the banking system to contract its total volume of loans and investments and,
consequently, its deposits. On the other hand, a decrease
in the percentage makes aVI)i1able for bank credit expansion reserves which were previously tied up against
existing deposits.
Certain other characteristics of Federal Reserve banking
should be recognized. The Federal Reserve System is a quasigovernmental system and, as such, is vested with certain
regulatory and supervisory powers and responsibilities which
are not possessed by commercial banks. The System has the
responsibility and, in fact, an obligation arising out of its
statutory directives to regulate the flow of its credit to and
from the commercial banking system in such a manner as
to contribute as much as is practicable through monetary
and credit means to the achievement of a balanced sustainahle high level of economic activity. In line with the discharge of this responsihility, the Federal Reserve System
continuously must attempt to appraise economic forces and
trends to determine whether greater or lesser availability of
hank reserves or access to Reserve bank credit will be in the
interest of over-all economic stahility.
Another point which deserves some consideration relates
to the source of funds which enables the Federal Reserve
System to purchase Government securities and make loans

As indicated above, the ultimate source of funds of the
Reserve banks is their note-issue power supported by unpledged gold certificates. When a member bank borrows
from its Reserve bank, it receives a deposit credit; in so far
as the Reserve bank is concerned, it has increased its assets
(loans) and its liabilities (member bank deposits ) and, in
addition, places the necessary amount of gold certificates as
a reserve against the deposit created. Although that deposit
may shift from one member bank to another, there is no
drain of funds from the System. If the member bank should
desire to withdraw its deposit in the form of currency, however, thus demanding final payment, the Reserve bank would
resort to the use of its note-issue power, issuing its own currency which it creates in payment of the deposit. The same
gold certificates which secured the original deposit, plus the
member bank's note secured by eligible paper or Government
securities, would serve as a reserve against the note issue.
Monetary and credit developments of the past several
months may serve to illustrate, to some extent, the functioning of Federal Reserve banking and its relation to the reserves of the banking system and to business, industry, and
agriculture. Each year the period from about the beginning
of September to the latter part of December is one of strong
seasonal pressure on bank reserves. This pressure arises primari! y as a result of two developments. First, there is a
steady and substantial increase in the business and public
demand for currency, and, consequently, the amount of currency in circulation rises. Second, there is a relatively strong
seasonal demand for bank credit. Business requirements for
working capital purposes rise with the increasing tempo of
fall and holiday trade. In addition, there is usually a strong
demand for credit in connection with the movement of agricultural commodities from farms and ranches to markcts.

36

MONTHLY BUSINESS REVIEW

Although the amount of additional reserves required by
the banking system to meet these seasonal and other essential
demands never can be predicted with precise accuracy, one
can be reasonably certain that each year during tIlls period
the banking system will need to obtain additional reserves to
discharge its responsibility to business, industry, and
agriculture.
Near the end of December this seasonal demand upon bank
reserves tends to relax as developments of the preceding few
months are reversed. Currency in circulation begins to de·
cline, often sharply, as businesses deposit such funds with
their commercial banks, which in turn deposit amounts in excess of their requirements with their Reserve banks. Likewise,
the loan demand of the preceding months slackens, and in its
place there usually appears a decline in loans of the banking
system and in total deposits as businesses and others use
funds accumulated during the period of seasonal activity to
reduce or liquidate their indebtedness.
Under conditions such as those outlined briefly above, one
might expect that if ti,e banking system is to meet its seasonal
requirements during the last 4 months of the year, a flow of
Federal Reserve credit into the commercial banking system
would be appropriate and necessary. Then, as conditions
change near the end of the year and reserves begin to accumu·
late, the Federal Reserve System should take steps toward
extil1guishing some of those reserves in order to avoid an
unduly largc exccss and an undesirably easy reserve and
money market situation. Of course, under either of these sets
of circumstances, general economic conditions with respect
to the fullness of production and employment and other factors that comprise the economic picture will be an important
consideration in determining the magnitude of Federal Reserve activities in the market. It is conceivable, in fact, that
the state of general economic conclitions might even influence
the direction of Federal Reserve activities during periods of
seasonal change, although that would be unusual.
The point to be emphasized in this connection is simpl)'
that, disregarding the effects of gold movements, the source
of reserves to the commercial banking system during a period
of heavy seasonal demand is the Federal Reserve System.
Through the processes of Federal Reserve banking, including
the making of loans and advances to member banks and purchases of Government securities, the Federal Reserve is able
to provide the banking system with the essential reserves.
Likewise, short of absorption through bank credit expansion,
which might not be desirable under the circumstances prevailing, excess reserves that havc been created and are available to the commercial banking system can only be removed
through Federal Reserve operations.
Without attempting to present a balanced statement of all
developments affecting bank reserves during the past several
months, certain major changes may be of interest in illus·
trating the processes involved.
Between August 27 and Dccember 24, 1952, the amount
of currency in circulation rose by 1I10re than $1,600,000,000.
This increase in currency circulation came about because
people and business firms needed more hand-to·hand money

to transact their business affairs. It was not initiated or stimula ted by either the Federal Reserve System or the commercial
banking system. The public was the active factor; the com·
mercial banking system and the Federal Reserve were largely
passive. The public demanded more currency from their commercial banks ; the commercial banks drew on their reserve
accounts with the Federal Reserve to obtain the currency to
meet this demand; and the Federal Reserve, through its note·
issue power, made such currency available.
The effect of this development on bank reserves, however,
\\ as significant, for it absorbed an amount of bank reserves
eq ual to the more than $1,600,000,000 increase in currency
circulation. As commercial banks drew against their deposits
(i.e, reserves) with their Reserve banks to obta in the cur·
rency to meet their customers ' requirements, there occurred
a reduction in reserves that might have been available for
other purposes. Furthermore, this involved a more severe
pressure on reserve accounts than would have been the case
from an expansion of bank credit. A dollar of currency mov·
ing into circulation requires a dollar of bank reserves,
whereas that same dollar of bank reserves would have supported several dollars of bank credit expansion - perhaps
85 or $6 - because of the fractional reserve requirements
characteristic of our banking system.
A net loss of monctary gold during the same period also
absorbed more than $150,000,000 of bank reserves, thus
exerting further pressure upon cOlllmercial banks.
In response to the strong demand for bank credit by busincss, industry, agriculture, the general public, and the Gov·
erlllnent, loan s and investmcnts of the member banks rose
by approximately S4,000,000,000 during the period. This increase in the total volume of bank credit was reflected in
sharply rising bank deposits, against which reserves were
required. Consequent.ly, betweell August 27 and December
24 the required reserves of the member banks rose by almost
S800,000,000.
These three factors of currency circulation, the gold stock,
and required reserves placed a drain or requirement upon the
reserves of the banking system involving more than
82,500,000,000.
The Federal Reserve System responded to thi s situation
b)' increasing its loans and advances to member banks and
its purchases of United States Government securities. There
is little difference between a member bank borrowing from
its Federal Reserve bank and a business borrowing from its
commercial bank. Just 8S the commercial bank usually credits
the cleposit account of its borrower, the Federal Reserve bank
crcclits the deposit account of the borrowing member bank.
The deposits so created for the member banks serve as addi·
ti onal reserves and lllay become the basis of bank credit expansion. Jn this way, through increasing its loans and advances_ the Federal Reserve System provided about $830,·
000,000 in add itional reserves to the Lanking system between
the beginning and the end of the period involved.
As previou,ly fl oted, purchases of United Sta tes Government securities by the Federal Reserve S),stem also add to

4

MONTHLY BUSINESS REVIEW
the total volume of bank reserves. Between August 27 and
December 24, net purchases of Government securities by the
System amounted to about . 1,520,000,000. The process by
which reserve funds are made available to member banks as
a result of purchases of Government securities by the Federal
Reserve System is a comparatively simple one.
The System might purchase securities from a dealer by
means of a cashier's check drawn on the Federal Reserve
Bank of New York. When the dealer depos its that check in
his account at a commercial bank and his bank, in turn, deposits it to its aCCowlt at a Federal Reserve bank, an addition
to the reserve balance of the depositing member bank would
result. Consequently, the collection of the New York Federal
Reserve Bank's check resulted, in this case, in the creation of
member bank reserves. To complete the transaction, the member bank for which the dealer might have sold the securities
would receive his check in payment, which would be de·
posited by the member bank at its Reserve bank. This latter
part of the transaction would involve a shift of the newly
created reserves between member banks. Expressed in ac·
counting termin ology, the member ballk selling the securities
gave up a certain amount of olle type of asset (Government
sec-uri ties ) and received in exchange an amount of another
asset (a deposit on the books of a Federal Reserve bank);
the Federal Reserve System acquired an asset in the form of
Government securities and created an oHsetting liability in
the form of member bank deposits.
Through these two means of loans and advances and purchases of Government securities, the Federal Reserve System
made about 2,350,000,000 available to member banks in the
form of reserves betwecn August 27 and December 24. Additional reserves also were provided by the System through
other operations. The fact that reserve positions were kept
under some degree of pressure, however, is evidenced by
member bank borrowing in substantial amounts from Re·
serve banks rather continuously during the period. The System, on its own initiative, placed fnnds in the market in the
form of reserves through purchases of Government securi·
ties and then pernlitted the member banks to make such other
reserve adjustments as were necessary through borrowing
from their Reserve banks.
During the last week in December the situation began to
change. The return flow of currency set in immediately after
Christmas and by carly in February had amounted to more
than $950,000,000. As this currency was returned by businesscs and the general public to commercial banks and then
on to the Federal Reserve banks, reserves were created. Those
reserves, if allowed to stand, would represent a basis of multiple credit expansion to the banking system. Tn addition,
there occurred a decline in bank credit dnring the period anrl
~ a reduction in deposits at member banks. Required reserves
, of the member banks declined between December 24 and
February 11 by about $500,000,000, making the total gain in
available reserves from these two major sources about
81,460,000,000.

37

To oHset this increase in reserve funds, and thus avoid
development of an undesirably easy money market situation,
the Federal Reserve System allowed its holdings of United
States Government securities to decline by more than $680,000,000. This reduction in holdings of Governments extin·
guished that amount of bank reserves. In addition, as member
banks obtained funds from the return currency flow and the
decline in required reserves, they reduced their loans and
advances from Reserve banks by $395,000,000. At the same
time, an outward flow of gold absorbed about $350,000,000
of bank reserves. Consequently, although during this period
of about 7 weeks $1,460,000,000 of bank reserves were made
available independent of Federal Reserve System action, approximately that same amount of reserves was absorbed
through the combined eHects of System operations, gold
movements, and reduction of member bank borrowings. Consequently, bank reserve positions have continued under moderate pressure, and the money market and interest rates have
been firm.
Activities of tlle types described above do not, of course,
give a complete picture of the operations or responsibilities
of Federal Reserve banks. They do indicate briefly, however,
some of the practices followed by the System to influence the
total volume of bank credit under certain types of economic
conditions. They also reveal, to some extent, the nature of the
relationship between the Federal Reserve and commercial
banking systems and the very substantial degree of dependence of the commercial banking system upon the Federal
Reserve for bank reserves. Finally, they show how the effects
of policies and practices of the Federal Reserve are transmitted through the commercial banking system to business,
industry, and agriculture.
When the Federal Reserve System is unwilling or reluctant
to make excess bank reserves available, commercial banks
become more restrictive in their lending policies than would
be the case otherwise. Money rates tend to rise, and business
and other sectors of the economy find that the stimulative
force of "easy money" either is lacking or is reduced. If, on
the other hand, the System eases reserve positions through
greater availability and thus places commercial banks in a
position to expand credit, the bankable loan demand of business, industry, and agriculture may be more favorably regarded by commercial banks or more fully satisfied.
In concluding, however, certain linlitations must be emphasized. It does not lessen the significance of Federal Reserve banking to recognize that while the Federal Reserve
can exercise much influence upon the supply of money, many
other factors are very important in influencing the flow of
money. There are such factors as taxes, debts, wage and price
policies, bargaining strength of diHerent groups in the economy, and foreign trade that exert a great influence on the
money flow. In other words, Federal Reserve banking, no
matter how soundly conceived and administered, cannot
alone guarantce the achievement of the most satisfactory level
of husiness activity. Nevertheless, the money supply is so
hasic and so important that Federal Reserve banking must
be recognized as having a primary role in influencing the
economic activity of the Nation.

38

MONTHLY BUSINESS REVIEW

REVIEW OF BUSINESS, AGRICULTURAL, AND

Retail sales at department stores
in the Eleventh Federal Reserve Dis·
trict during January and the first
half of February were substantially
above a year earlier, although down
seasonally from December. The proportion of merchandise
sold for cash during January was about the same as a year
ago. Although accounts receivahle declined seasonally from
the December record, charge accounts and instalment accounts at the end of the month were up 5 percent and 46
percent, respectively, as compared with a year earlier. Endof·month department store inventories in the District in
January were 10 percent above the same date last year;
stocks on order were up 13 percent. Sales at furniture stores
in the District during January were 9 percent above a year
ago.
Farm operations in the District are making good progress;
cotton planting is active in south Texas. Moisture conditions
are generally satisfactory in most of the eastern half of the
District, but droughty conditions continue elsewhere. Farm
prices are holding relatively stable. There arc more milk
cattle and beef cattle on district farms than a year ago, despite substantial liquidation of beef herds in drought-stricken
areas.
The removal of price controls from crude oil and most refined petroleum products on February 12 caused no immediate reaction in the oil price situation in this District, which
reRects partly the ample supplies on hand. Demand for oils
is running above the first part of 1952. Refinery activity in
the District declined during January and the first half of
February. Daily average crude oil production in the first part
of February was sHghtly above the same period last year.
Allowables for March, however, have been cut back from
the mid-February level.
Nonagricultural employment in the District in December
was at an all-time high and 4 percent above a year earlier.
Althongh seasonal declines occurred in January and February, employment continued above year· earlier levels. Manufacturing employment in December reRected a year-to-year
gain of 6 percent. Weekly wages for manufacturing workers
in the five states of the District in December averaged 7 percent above a year earlier.

FINANCIAL

CONDITIONS

the weekly reporting banks declined slightly during the
period; however, on February 13, the total was 14 percent
above a year ago. Cross demand deposits at all member
banks in the District in January averaged 5 percent higher
lhan a year earlier. Between January 15 and February 15,
earning assets of the Federal Reserve Bank of Dallas rose;
Federal Reserve notes in circulation declined.
Retail sales at department stores
in the Eleventh Federal Reserve DisLrict in January were 6 percent
higher than in the same month last
year, compa red with a I -percent
gain for the Nation. Weekly reports received during the first
half of February indicate that sales at district department
stores were continuing ahead of sales during comparable
wceks of 1952 by approximately 8 percent.

Demand was widespread during January in this District,
and reporting stores indicate that most major departments
participated in varying degrees in the gain over year-ago
totals. A notable exccption, particularly in view of the traditional January sales of white goods, was the decline of 8 percent in demand for household Lextiles. In the soft goods departments, men's and boys' wear led in percentage gain with
an increase of 6 percent. Furniture, which is usually featured
by the hard goods departments during January, showed a
sales gain of 15 percent.
The proportion of merchandise sold for cash during Janu·
ary represented 32 percent of total sales, while charge account sales and instahnent sales accounted for 54 percent
and 14 percent, respectively. That distribution is not significantly different from January 1952.

RETAil TRADE STATISTICS
(Percentage change)
NET SALES

STOCKSI

January 1953 from

January 1953 from

January
line of Irade by orec

December

January

December

1952

1952

1952

1952

10
25
6
9
7
13
9
1B
11
10

2
-1
4

DEPARTMENT STORES

Waco ••••••••..••...• • .... • • . • ..•

13
3
11
- 2
13
10

Other cities ••... . • . ...•....•.••••..

4

-53
-56
-53
- 53
- 56
- 54
- 50
- 56
- 55
-55

FURNITURE STORES
Tota l Eleventh Di$trict ••.•••..•.• ••• ..
Austin •.•..•••.•••••.•••.•••••..• •
Dallas ••••••••.•••..••.•••••.. . •. •
Houston •••.•••..••• .. •.•..••••.•• •
Port Arthur ••.•..•....•.•.••.•.••..
San Antonio • ••.•••.••••••••••• . • • •
Shreveport, La ..... •••••.•••.•.•.••.

9
29
31
7
7
1
4

-38
-44
-20
- 55
-23
-53
-35

28

-28
-34

Tolal Eleventh District ••.•••••••••.•.•

The value of construction contracts awarded in the District in January was the second highest for any January on
record, although down sharply from Decem her. Awards for
residential construction were higher than in all but two of the
previous 18 months. Contracts for construction of dwelling
units in new residential buildings in Texas in 1952 almost
equaled the 1950 record.
Deposits of the weekly reporting member banks in the
District declined 5.4 percent during the 4 weeks ended
February 13, compared with a decline of 3.0 percent during
the comparable weeks of last year. The decline occurred in
demand deposits; time dcposits rose 1.4 percent. Loans at

CorpllS Christi . ..............•.... . .
Dallas . ....... .. . ... .. ........... .
EI P05C ••..••...........• , ••••••••
Fort Worth . . .•....• . ...•........•.
HOu$ton .• .. . •... . .• •. . • •. . . •.• .•• •
Son Antonio • .• . ... .. .• . •.• •...•• . .
Shreveport, La ... • .. ..••• .. ... . .•••.

HOUSEHOLD APPUANCE STORES
Total Eleventh District ••.. .. . ... . . .•..
Dallas . •.. ... ••.. . ........• .. ..•. •

6
20
4

10

1 Stocks ot end of month.
I Indicates change of leu than one·half of 1 percent.

I

1
4
-2
2
6
4

-6

-2

-9

-10

-20

-11

-4

-1

~

MONTHLY BUSINESS REVIEW

39

WHOLESALE TRADE STATISTICS

DEPARTMENT STORE SALES AND STOCKS
ELEVENTH FEOERAL RESERVE DISTRICT

Eleventh Federal Reserve District

Monthly I" de. Numbffl,AdJusted For Seasona l Vor lotlon,1947.49.IOO

(Percentage chan".)
NET SALESp

STOCKS'p

January 1953 from

January 1953 from

January

Furniture store sales in the District during January
gained 9 percent in dollar volume over January 1952. Accounts receivable at the end of the month were off 4 percent
from December but were 25 percent higher than on the same
date last year . Collections during January were 10 percent
larger than during December and were in approximately the
same volume as in the comparable month a year earlier. For
INDEXES OF DEPARTMENT STORE SALES AND STOCKS

=

100)

UNADJUSTED

ADJUSTED'

Jan. Dec. Noy. Jan.
19S3 19S2 1952 1952

Jan .

Dec.

Nov.

Jan .

1953

1952

1952

1952

SALES-Daily average

21S

14S

9S

206
248

138
162

94
104

129
127
148

130
127
148

14S

129
11 9

122
122
13'

123p 120

146

112

137p 130

130

12'

101
98

STOCKS-End of month
Eleventh District . ...•• •. •••
I

Adjusted for sea sooal variation.

p Preliminary.

17

28

4

24

10
26

8
2.

- 1
-29

- I

2
12
23

- 10

3
2

-5

6

-27

I.

-10

19

43
-10
13

37
-14
-50

8
0
-24

3
3
-6
18

-34

-15

39

-3

Stocks gt end of month.
p-Preliminory,
I Indicates change of leu thgn one-half of 1 percent.
SOURCE: United States Bureau of the Census.

Inventori es a t reporting department slores in this District
at the end of January were 10 percent ahove a year earlier
and were considered by the trade to be in good balance in
relation to hoth current sales volume and character of demand. Stocks on order were reported 13 perccnt greater than
a year earlier.

liS

10

I

A~~ouills )'e~l'ivable declined during Ja nuary in both
major types of credit from the all·lime peaks reached during the previous month. Hegular charge accounts declined
19 percent; instalment accounts, 1 percent. The decline in
charge accounts from December reRected about the usual
seaso nal contraction. Compared with the same month in
1952, charge accounts in January were 5 percent greater and
instalments showed an increase of 46 percent. The growth
in instalment al'counts outstanding is due parlly to increased
\'olume of instalment sa les during recent months and partly
to longer credi t terms. The current average collection period
fo r charge accounts is approximately 65 days, virtually un~hanged (rom a year earHer. The average collection time for
instalment accounts was extended durin g the course of the
past yea r from abo ut 10 months to approximately 16 months.

Dallas . ............. .... •

1952

-1

Dry goods..........................

O·L-~I~A..,-~~I.~,0n-~-7.I.~5~-~'I~.S 2,--L-.,~.'~'~~0
••
1
..

Hous ton • •••.•.••..•••... •

1952

Grocery {full-line wholesa lers not sponsoring groups)....................
Hardware .. . . ......... ....... ,.....
Industrial supplies....................
Mochinery e quipment ond supplies Clilcept
electrical... ..... .... ..... .. ......
Meta ls ... ............. , . , . . . . . . . . . .
Tobacco products .... ,' .......... ,...
Wines ond liquors.. ... ............. .
Wiring supplies, construction moteriols
distributors. ......................

---+----1 100

50'1----+----11----1-----1-----150

Eleventh District •• •••.•• • .•

December

1952

Drugs ond sundries.. .... . . .. ... .... . .

100 '. -

Area

Jonuory

1952

Automotive supplies..................

(1947.49

December

line of trade

-+----1150

15o'1-- --+-- - - 1 1 - -

the fifteenth consecutive month, furniture stores in this District in January reported end-of-month inventories on hand
at lower rctail value than for the year earlier - being 6 percent lower than in January 1952.
\Vith government controls largely removed from production, prices, and wages, and stable to slightly rising r eal personal incomes in prospect, it is expected that competition for
the consumer dollar will be strong. The retail merchant of
1953 is no longer cngaged in doing business in a seller's
market; he is operating in a market in which there is no
shortage of consumer goods. He must be particularly alert
and sensitive to both internal and external factors, all the
way from salesmanship behind the counter to changes in
economic conditions affecting the Nation, as well as his
community. This is basically a healthy condition of free enterprise, but it carries with it a grave responsihility for sound
husi ness leadership.
Preparation of land for springplanted crops is making rapid progress in the District. The mild,
open weather that prevailed during
most of February permitted working of fields in all sections. Cotton planting is active in the
Coastal Bend counties of Texas and in the southern irrigated
areas of New Mexico. Some early fields of cotton are up to a
stand in the Lower Rio Grande Valley of Texas, but planting
is being retarded in that area by lack of moisture. Transplanting of the north Texas onion crop was completed early in
February, and planting of early commercial vegetahles in
cast and south Texas is well advauced.
Moisture conditions are generally satisfactory in northern
Louisiana and in the eastern half of Texas. Reports from the
Lower Rio Grande Valley indicate that moisture conditions
i n that section are lIluch more favorahlc than a year ago hnt
that additional wa ter will be needed if the 1,000,000 acres of
cotton privately forecast for that area are to he planted. Elsewhere in the District, soils are generally dry, with subsoil
moisture reserves very low and surface moisture barely ade-

MONTIiLY BUSINESS REVIEW

40

FARM COMMODITY PRICES

Top Prices Paid in local Southwest Markets
Comparabl e Comparablll!l

Week ended

week

Unit Feb. 19, 1953 lost monlh

Commodity and market

COTTON, Middling 1 Sj16·ineh, Dallas • ••••

WHEAT, No. I hord. Fort Worth ••••••••••
OATS, No.2 white, Fori Worth •• •••• • • • ••
CORN, No.2 yellow, Fort Worth •••••••••
SORGHUMS, No.2 yellow milo, Fori Worth ••
HOGS. Choice, Fort Worth ••••••••••••••

lb.
bu.
bu.
bu.
<wt.
<wt.

cwl.
cwl.

SLAUGHTER STEERS, Choice, Fort Worth • •••
SLAUG HTER CALVES, ChoIce. fort W orlh •••
STOCKER STEERS, Choice, Fort Worth ••••••
SLAUGHTER LAMSS, Chorce, Fort Worth ••••

'wi.
(wi.

HENS, 3·4 pounds, Fort Worth •••••••••••
FRYERS, Commercial, fort Worth ••••••••••
BROILERS, south Texas ••••••••••••••••••

lb.
lb.
lb.

week
105t year

.3250

$ .3215

S .3995

2.653,4
1.02lA

2.673,4

2.753,4
1.14
2.12Y2

1.84
3.20
21.25
24.00
24.50
23.00
21.50
.20
.27
.26

1.09*
1.88Yl
3.18
19.75
25.25
25.00
23.50
22,S a
.18
.28
.27

3.14
18.75
34.00
34.00
34.00
26.00
.20
.30

around 4,000,000 or more bales, and despite a rate of domestic consumption equal to or slightly above a year ago, cotton
prices have shown a great reluctance to rise much above the
loan rate. Shortages of some of the better grades and staples
have developed, and this has caused a strengthening of the
basis of these particular grades. Through February 13, Commodity Credit Corporation loans had been made on 1,850,000 bales of 1952-crop cotton .
Cattle numbers, despite severe liquidation in some parts
of the Southwest, increased 455,000 head, or 3 percent, during the year, witb increases reported for both milk cattle and
beef animals.

quate to prevent deterioration of fall-sown crops. In west
Texas and eastern New Mexico, dust stonns during February
caused considerable wind erosion and some damage to small
grains.

LIVESTOCK RECEIPTS
(Number)
FORT WORTH MARKET
Cia"

In northwest Texas, timely snow and freezing rain in midFebruary enabled the winter wheat crop to hold its own, although moisture reserves are virtually nonexistent. Cutworms are reported to be doing some damage in northern
Low Rolling Plains counties. Much of the crop was seeded
late and is extremely vulnerable to high winds or extended
dry weather.
Ranges and pastures are short in western portions of the
District. In central, northern, and eastern Texas counties and
in northern Louisiana, small grains, legumes, and grasses are
providing an increasing amount of pasturage. In the range
areas of Texas, New Mexico, and Arizona, heavy supplemental feeding continues, with ranges providing virtually no
cured or green feed. Livestock are losing some weight, and
calf and lamb losses are reported to be heavier than usual,
because of the poor feed conditions.
On the whole, prices received by district farmers have
tended to stabilize at the lower levels reached in November
and December, although some strengthening occurred in the
cotton market and in livestock prices during the past month.
Grain prices broke sharply in carly February but recovered
much of the loss later in the month. Cotton prices in recent
weeks have been at or near the loan level for most grades.

January
1953

January
1952

Cattle ••••• •••
Calves ••••• •••
Hogs •••••••••
Sheep ••••••••

52,613
20,743
87,728
42,696

28,730
14,375
105,708
"'0,21'"

1

SAN ANTONIO MARKET

December
1952

Janucry
1953

January
1952

December
1952

59,335
22,734
83,215
"'5,677

21,467
12,420

23,651
18,899
8,856
lJ5,4BS

19,276
11,060
3,132
1'0,392

18,832

Includes goats.

The ycar 1952 was the fourth consecutive year in which
the number of cattle and calves increased in the Nation, and
the record 93,696,000 head on farms on January 1, 1953,
exceeds the previous record reported a year earlier by about
6,000,000. The 16,066,000 head reported in states of the
Eleventh Federal Reserve District on January 1 is just short
of the I'ecord 16,185,000 head reported in 1945. During the
extremely dry years of 1951 and 1952, substantial liquidation of cattle herds took place in the range areas of west
Texas, New Mexico, and Arizona bnt was more than offset
by a general increase in the number and size of cattle herds
in otber parts of the Sonthwest, particularly in Louisiana
and in eastern parts of Texas and Oklahoma.
The nnmber of sheep and lambs in the five states of the
District on lanuary 1 was down 9 percent from a year ago
and was the lowest since 1925. Louisiana and Arizona re-

LIVESTOCK ON FARMS, JANUARY 1
(In thousands)

Failure of export demand for American cotton to develop
has raised the possibility of a carry-over next August 1 of

Texas
1952

CASH RECEIPTS FROM FARM MARKETINGS

lin thousands of dellar.,
November

1952

1951

62,275
59,439
37.243
58,524
234,420

S 53,401
43,879
23,591
60,859
232.935

$ 61,972 $ 357,653

Total •••••• . $527,873

$451,901

$414,665

$335,968 $3.784,051 53,904.185

SOURCEI United States Department of Agricultvre.

1952

Cumulative receipts
January-December

Arizona • •••••• $ 67.794
Lovhiana... • • •
63,179
New Mexico...
42,413
Oklahoma.... .
75.75B
Texas....... . 278,729

State

1951

December

54,944
21 ,034
40,836
157,182

1951

381,448
235,905
622,436
2,186,609

1952

415,773
420,369
242,559
704,311
2,121,173

All cottle • •. ••••••• • ••• .• 8,853
Milk caltle •••••.•.••••• 1,602
Beef cottle ••••••••..•• 7,251
All sheep ••••••••••••••• • 6,188
Stock sheep ••••••••••• 6,071
117
Feeders •••••••• • ••••••
Hogs • . ..•.•..•..•.• , •.• 1,645
GoaIs 1 •• •••• ••• • •••••• • 2,054
321
Horsel • • .•••..•• ••••••••
96
Mules ••••••••••••••••.•
Tetal above species •••.• 19,157
Chickens3••••.. .• . • . •.. .. 22,992
549
Turkeys •.•.•.•.•. . .•...•

1953p
8,853
1,652
7,201
5,511
5.... 64
47
1,119
1,890
286
89
17,748
20,455
615

Five southwestem
srates l

1952
15,611
3,162
12,449
8,32'
8.066
258
3.057
2,054
728
227
30.001
38,281
688

1953p
16,066
3,231
12,835
7,613
7.'80
133
2,163
1,890
654
210
28,596
34,004
731

United Stotes

1952

19S3p

87,844
35,637
52,207
32,088
28,050
.... 038
63,582
2,054
4,330
1,913
191,811
449.925
5,822

93,696
36,879
56,817
:.11,611
27,857
3,754
5 .... 632
1,890
3,870
1,766
187,465
"'31,410
5,339

1 Arizona, Louisiana, New MexiCO, Oklahoma. and Texas.
: Goat numbers mown for Texas onlYI estimates for other states nat ovoilable.
S Does nat include commercial broilers.
p_Preliminary.
SOURCE! United States Department of Agriculture.

MONTHLY BUSINESS REVIEW
port increases, while sharp declines occurred in Oklahoma
and Texas. There was also a sharp decline in the number of
sheep and lambs on feed in Texas, which resulted primarily
from the lack of available grazing from the current winter
wheat crop.

41

CONDITION STATISTICS OF WEEKLY REPORTING
MEMBER BANKS IN tEADING CITIES
eleventh Federal Reserve District
(In thousands of dollau)
february 18, February 20,
1953
1952

Item

Hog numbers in thc District declined more sharply than
any other species of livestock; numbers in Texas and Oklahoma were reduced one-third, while substantial declines occurred in other district stntes. The number of goats on Texas
ranges declined sharply for the eighth consecutive year, with
the 1,890,000 head reported on January 1 the lowest since
records were begun in 1920.
The number of ch ickens on farms, excluding commercial
broilers, dcclined during 1952 in all five district states. The
number of turkeys on farms in Texas increased 12 percent,
while numbers in other district states held constant or declined.
Deposits of the weekly reporting
membcr banks in the District declined sharply between January 21
and February 18. The decrease reflects principally a reduction of demand deposits of ind ividuals and businesses. Other changes
in major ca tegories of asscts and liabilities during the 4
weeks include rather sharp reductions in total investments
and cash assets and a nominal decrease in loans.
Deposits declined 241,649,000, or 5.4 percent, during
the 4 weeks ended February 18. This decrease compares with
a contraction of S121,301,000, or 3.0 percent, during the
compa rable period last year. Demand deposits of individuals,
partnerships, and corporations declined $167,018,000, or 6.3
percent, accounting for 69 percent of the over-an deposit decrease. Contraction in these deposit accounts of individuals
and busincsses occurred principally during the week ended
January 21) and is associated, in part, with income tax payments due Jalluary 15.
Other changes in deposits include a decrease of S99,986,000 in interbank deposits and an increase of $37,414,000 in
United States Government deposits. Time deposil:8 rose $7,198,000, or 1.4 percent, with slightly more than the total increase occurring In the accounts of individuals and
businesses.
The weekly l'eporting member banks met these deposit
losses principally throu gh a reduction in investments and a
drawing down of cash and balances. Investments declined
S82,059,000, or 5.6 percent. Approximately 88 percent of
this reduction was reflected in sales or redemptions of
Treasury bills. Holdings of Treasury certificates of indebtedness, nited States Government bonds, and municipal and
other nou-Government securities declined, while invesbnents
in Treasury notes increased. Cash 'and halanccs of these
banks declincd 122,171.000, or 3.3 percent, renecting principall) decreaseli ill cas h collecti on itel1l; and balances with
other banks.

Total Joons (grossl and investments . .......... $3,154,678
Tolalloans-Net 1................ .. ..... 1,765,068

Total loans-Gross. . • . ..•••.......• ..... 1,783,632
Commercial,industrial, and ogrlcultttroJ loans 1,191,203
loans to brokers ond dealen In securities, .
11,452

Ot;ee:U:~i~~~ .f~~ ~~r.c~~~I~~. ~~ ~~r~~i.n~

.
.
.. .
66,153
128,756
Real estate loans .................... .
18,183
loons to bonks ...................... .
367,885
AU other loons ...................... .
Totcl investments ............. . ........ . 1,371.046
U. S. Treasury bills •...................
137.527
151.649
U. S. Treasury certificates of indebtednen.
U. S. Treasury notes ... . . . ............ .
216.034
U. S. Government bonds (including guaran·
teed obligations) • .. .. . . ... . ........
692.155
Other sccUt"ities .•.....................
173.681
598,897
Reserves with federal Reserve Bank •. . .......
407,740
Salonces with domestic bonks ............. . .
Demand deposits-adjusted' ........ . ...... . 2,438,508
.497,463
TIme depolits except Government ........... .
121,984
United States Government deposits .... ...... .
838,657
Interbgnk demand deposits ................ .
35,150
Borrowings from federal Reserve Bank ... .... .

January 21.
1953

$2,904,371
1,548,067
1,564,351
1,085,496
7.660

$3.242.583
1,770,649
1.789.478
1,188,331
10.297

55.639
, 13,081
10,884
291,591
1.340.020
225.762
162.571
180.584

64.948
128.127
32.535
365,240
1,453.105
209.688
153.029
211,163

605.995
165,108
564,512
411,031
2,337,890
452,425
77,076
794,894
3,200

704.678
174.547
577,962
455,876
2.528,817
490,262
84,570
938.643
8,000

I After deductions for reserves and unallocated charge-olft.
1 Includes olt demand deposits other thgn interbank gnd United States Government, leu
cosh items reported as on hand or in process of collection.

Loans of the weekly reporting member banks declined $5,S46,000 during the 4 weeks ended February 18. The decrease
ill loans to banks more than accounted for the over-all reduction. Other categories of loans rose, although the amount of
expansion was nominal. On February 18, loans of these banks
amounted to $1,783,632,000, reReeti ng an increase of $219,281,000, or 14.0 percent, over the comparable total for last
year.
During January, gross demand deposits of all member
banks in the District averaged $7,109,145,000, reflecting
an increase of $18,841,000 over December and an expansion of $329,690,000, or 5 percent, as compared with January 1952. Country banks accounted for 60 percent of the
increase from December to January. Time deposits of the
member banks increased $13,654,000, or 2 percent, in
January, continuing the upward trend that had prevailed in
lIlost months since March 1951. Reserve city and country
member banks shared about evenly in the more rccent rise_
Debits to deposit accounts reported by banks in 24 cities
of the District declined 2 percent during January as compared with the total for December 1952. The decline in the
volume of spen ding which these figures reflect - a reduction
due principally to seasonal factors - was common among
GROSS DEMAND AND TIME DEPOSITS OF MEMBER BANKS
Eleventh Federal Reserve District
(Avllragel of dolly flgurll •. In thousands: of dollars)
COMBINED TOTAL

Date

Gran
demand

January 1951 ....
January 1952 .. ..
September 1952.
October 1952. ..
November 1952 ..
December 1952..
January 1953 ....

$6,349,75.4
6,779,455
6,692,788
6,828,512
7,025,207
7,090,304
7,109,145

Time

RESERVE CITY BANKS

Gron
demand

Time

COUNTRY BANKS

- Gross - - -demand

Time

$657,601 $3,098,119 $400,388 $3.25 1.635 $257.213
714,332 3,162,301 391,577 3,617,154 322,755
767,553 3,190.957 421.871
3,501,831 345.682
770,099 3.262,180 420.233 3,566,332 349,866
780,156 3,338,376 421,427 3,686,831 358.729
784,739 3.380,098 422,356 3,710.206 362,383
798,393 3,387,726 428,928 3,721,419 369,465

MONTHLY BUSINESS REVIEW

42

most reporting centers, although some cItIes showed substantial increases_ Charges to deposit accounts during J anuary of this year were 11 percent above the comparable total
for 1952. The annual rate of turnover of deposits was 16.0
III both December 1952 and January 1953. This rate compares with 15.5 for January 1952.
BANK DEBITS, END-OF-MONTH DEPOSITS
AND ANNUAL RATE OF TURNOVER OF DEPOSITS
(Amounts In thoutands of dolloH]

DEBITS1

DEPOSITS'

Percentage
chonge f rom

Jonuory

City

1953

ARIZONA

Jan.

Dec.

Annual rote of tum over

January 31,

1952 1952

1953

Jon.

Jan.

Dec.

1953 1952 1952

30

13

$ 117,676

12.6

10.8

11.3

243,186

8
17

6
14

52,605
202,198

12.5
14.2

12.0
12.1

-3

-.4

31,8.40

10.4

11.8

10.9

Abilene •...•.• .. • •• •
Amarillo ••• •••••••••

56,305
146,239

- I

_4

56,812

Auitin • •• .• . ••...•• •

218,154
141.3 ....

1
61

119,935
122,686
105,576
115,127
23,007
1,090,273
169.9.46
399,394

11.6
14.4
20.8
16.0
16.6
8.3
19.1
16.8
16.4
9.6
17.8
11 .5
14.0
13.6
8.5
11.8
9.1

12.0
14.8
19.8
15.4
16.7
8.3
18.4
15.6
16.7
9.7
17.0

12.1
14.2
13.1
16.1
15.1
9.0
19.3
17.4

The Horne State Bank, Marble Falls, Texas, an insured, nonmember bank located in the territory served
by the Head Office 0/ the Federal Reserve Bank of
Dallas, was added to the Par List on February 2,1953_
The officers are: Carter Stewart, President; H_ E. Faubion, Vice President; and H_ J. Schnelle, Cashier_
The Donie Slate Bank, Donie, Texas, an insured,
nonmember bank located in the territory served by the
Head Office of the Federal Reserve Bank of Dallas, was
added to the Par List on February 16, 1953. The officers are: Mrs. Ettie Hudson, President; Ida Belle Gilliatn, Vice President ; and Cloner Gilliam, Cashier_

11.8
12.2

27,959

NEW PAR BA KS

Tucson •....•••.•...• $ 123,378

LOUISIANA
Monroe, ...••...•.• .
Shreveport •••• ••.•••
NEW MEXICO
Roswell ••..•...• •• • •

TeXAS

Beaumont • ••••.. • • • •

57,031

163,217
Corpus Christl ....... .
16,139
Corsicana . .........•
Dallas .......... ... • 1,779, 369
243,17.4
EI Poso ••....... • .••
Fort Worl'tl ••.•.. . • • •

Golyeston .. .... •.. · .
Ho~ton •••

570.425
83.200

•••• .• •• • • 1,809,031

loredo .• .. . ... . . . · .
lubbock ... .... ..•. .
Port Arthur .•. .. . .. ..
Son Angelo •. . •. .....
Son Antonio ..•.. , .. ·
Texarkana ' •.. .. .... .
Tyler ... ... . .•. .. ••.
Waco . . . •. .. • . .. ...
Wichita Foils ••.•. . , ..

25,112
144,973
50,171
38,437
398,207
21,227
61.245
78,323
90,4"7

TOlol-2" cities ........ $6,586,293

3
10
10
12
3
14
26
10

#

7
-7
-8
-1
-3

2

_1

11
13

-3
-5
-5

7

103,845
1.195,273

25,965

11 .9

15.2
13.3
8.6
11.9
8.5
10.3
10.3
16.0

8

3

8

-7
-6

107,808

10.0
9.8

_2

$4,834,977

16.0

15.5

-9

120,833
43.986

1

- ;
-2
5

6

#

,
11

53,197
400,916

27,096
58,175
90,808

12."

16.6

9:7
18.2

11.6

14.9
13.4
9.2
11 .6
10.1
12."
9.6
10.1

1

12.1

1 Debits to de pout QCcounls excepl interbQnk QCCQunts,
t Demand and time deposit., including certified Clnd officeu' checks outstanding but ex.
dudlng de polits to the credit of bank"
• These flgures include only one bonk In Texarkana, Texas. Total d.bit. for all banks in
Texarkana, T.xas·Arkansas, including two banks located in the Eighth District, amounted to
$40,375,000 for the month of January 1953.
,Indicates c:hang. of less than one-half of 1 percent.

The principal changes in the condition of the Federal Reser ve Bank of Dallas between January 15 and February 15
include an increase of $41,116,000 in earning assets and decreases of $51,090,000 in gold certificate reserves and $5,855,000 in Federal Reserve notes in actual circulation. Member bank reserve deposits declined $5,630,000. The increase
in earning assets reHects principally an expansion of $48,150,000 in discounts for member banks, inasmuch as holdings of Government securities declined $7,034,000. On February 15, notes of thi s bank in actual circulation amounted to
$728,979,000, as compared with a circulation of $673,080,000 on the same date last year.
CONDITION OF THE FEDERAL RESERVE BANK OF DALLAS
lin thousond, of dollors)
February 15, February 15,
Item

1953

Totol gold c:ertific:ot. r.'.r.... s . .. . , . ..... , ... $ 665,584
Discounts for memb.r banks . . . ... . .. ' •... , .
49,180
Industrial odvonc.s ., .. .. .... ... . .. .. . .... ,
0
Foreign loans on gold, . . . . . . . . . . . . . . .. . . . .
945
U. S. Ga ... ernment securiti •• , ....... , ...... " 1,153,318
Total earning au.ts.. . ............... . .... 1,203, 443
Member bank reser ... e deposits .... , ...... ... 1,081 ,871
fed.ral R.s. r"'. I1Ot., in actual circula tion.... .
728,979

1952
8,500
16

o

1,060,941
1,069,457

1,023,353

673,080

The Secretary of the Treasu ry announced on January 27
that holders of the 1)Is-percent certificates maturing February 15 and outstanding in the amount of $8,868,000,000 ~
would be given a choice of exchanging their holdings either
{or a I-year certificate of indebtedness or for a 5- to 6-year
security. On January 30 the Secretary announced that the
certificate would have a coupon rate of 2% percent, while the
5- to 6-year security would be a 2 y:! -percent bond with a
term of 5 years, 10 months to maturity. Subscription books
for the new issues were open from February 2 to February 5.
The results of the exchange offering were announced on
February 13, Holders of $8,114,000,000 of the maturing
issue accepted the 21,4 -percent certificate in exchange, while
holders of an additional $620,000,000 accepted the new
bond. Cash redempti ons totaled 134,000,000, or approximately 1.5 percent of the tota l amount of the maturing
certificates.
The Secretary of the Treasur y also announced on February
13 that all outstanding 2-percent Treasury bonds of 1953-55
which are due June 15, 1955, are called for redemption on
June 15, 1953. This bond issue, which is one of the few remaining partially tax-excmpts, is outstanding in the amount
of $724,678,000. The Secretar y declined to call for redemption on June 15 the two issues of 2-percent bonds of 1952-54,
the 2-percent bonds of 1951·55, and the 2 \4-percent bonds
of 1952-55.

January 15,

1953

$ 653,176

The Lytle State Bank, Lytle, Texas, an insured, nonmember bank located in the territory served by the
San Antol!l:o Branch of the Federal Reserve Bank of
Dallas, was added to the Par List on February 16, 1953.
The officers are: Ed M. Wells, President; A_ J_ Gidley,
Executive Vice President; and lack H. Pruett, Cashier.

$ 716,674
1,030

o

945
1,160,352
1,162,327
1,0 87,501
734 ,834

The removal of pri ce controls
from crude oil and all refined products except 1\0. 2 fuel oil on February 12 had no immediate effect on
prices of these items in this District
or m most other parts of the country. On the West Coast,

4

MONTHLY BUSINESS REVIEW

however, prices of crude oil, gasoline, and heating oils were
• raised. At the same time, higher prices for Pennsylvania
Grade crude were offered by principal buyers.
There has been no general increase in the price of crude
oil in the Nat ion during the past 5 years. While increases
in costs of drilling, production, and other operations duro
ing this period might portend a general rise in the price of
crude, the ample supply sitnation in both crude and refined
products tends to discourage such an increase, despite the
removal of price controls.
National stocks of crude oil totaled 271,900,000 barrels
February 14, which is 16,900,000 barrels, or 7 percent,
higher than a year earlier. Most of the increase occurred in
this District, where stocks on that date totaled 144,800,DOO
barrels. Stocks of major refined products in the Nation,
meanwhile, were up 25,800,000 barrels, or 10 percent, as
compared with a year ago. Although stocks of gasoline and
kerosene showed relatively moderate year·to·year increases
of 3 percent and 6 percent, respectively, distillate fuel oil
stocks were 21 percent higher than a year earlier and resid.
ual fuel oil stocks were up 19 percent. In contrast with the
position of refined stocks in the Nation, district stocks of all
major refined products, except residual fuel oil, were appre.
ciably lower ill early February than a year earlier.
011

CRUDE OIL PRODUCTION
(Belrre!.)

Area

ElEVENTH DISTRICT
TeJlclS R. R. Com. DIttrich
1 Soutn Central • • • ••••••
2 MIddle Gulf •••• ••••••
3 Upper Gulf ••• • •••••• •
4 lower Gulf •••••••••• •
5 East Centrol ••••••••• ••
6 Northeast•••••••••••••
Eas' Texas ••••••••••
Other fields ••••••• ••
7b North Cenlral ••••• ••• •
7c West Central ••••••••••
8 West •••••..••••• • • ••
9 North • ••• • •••••••••••
10 Panhandle ••••••••••• •
Total Texas •••••••••
Hew Mexico • ••• •••••••• • • •
Horth louisiana •••• • • • • ••• • •
Tota I Eleventh District ••••• •
OUTSIDE ELEVENTH DISTRICT •••

UNITED STATES ••••••••••••••

Crude oil production iu the District during the first half
of February averaged 3,225,000 barrels per day, which is
• slightly higher tban in Jan uary and also larger than during
, the correspondin g period of last year. Daily average produc.
tion in January was off from the December daily average
rate lout substantially higher than in January a year ago.
Prudu!;tion trends in the Nation were similar to those in the
District.

1.160.050
5.175.650
15.489,250
8,183.600
1.640.000
12.199.600
8.142.000
4,057,600
3.478.600
5.448,500
29.597,100
5.827,450
2,475,450
90,675,250
5,404,650
3.526.650
99,606,550
101,985,750
201,592,300

37,421
166.956
499,654
263.987
52,903
393.535
262.6'5
130,890
112,213
175,758
954.746
187,982
79,853
2.925.008
174.344
113,763
3.213,115
3,289,862
6,502,977

5,015
7.143
24,062
12.840
638
860
-5.716
6.576
28.113
45,77'
15,536
30,366
-3,681
166.666
22,618
-14.180
175.10'
132.893
307,997

-1.398
-7,379
-9,785
-9.007
-2,155
-9,065
-2.357
-6,708
-5.782
269
-34,396
-1.999
-845
-81,542
2,302
279
-78,961
24,219
-54.742

NIDOLE GULF
UPPEA GU lf

lOwt:R GULF
UST CENTRAL
,.

Texas oil allowables for ~arch were cut back 118,400
barrels from the mid.february level, in recognition of the
heavy stock position. This is the third reduction in a period
of 4 months.

January 1953
Increas. or decrease in daily
- - - - - ' - - - - average production from
Total
Dailyovg.
production
production January 1952 Dec. 1952

SOURCE: Estimated from American Petroleum In,titute weekly reports.

Total demand for all oils in the last quarter of 1952 is
estimated by the Bureau of Mines to have been about 4 per.
• cent higher than in the same period of the previous year. The
demand in January 1953 also appears to have been up
moderately from a year earlier. Therefore, some increase in
national stocks of crude oil and refined products over levels
of early 1952 appea rs desirable. Nevertheless, a feeling that
crude and refined stocks are somewhat high relative to pros.
pective demand is reflec ted in replies by major oil companies
to questions posed by the Texas Railroad Commission in
connection with a statewide oil proration hearing around
mid.February.
Refinery activity in the District averaged 2 percent higher
in January than in December; however, crude runs to reo
finery stills, after reaching a high point in the week ended
January 3, showed declines for five successive weeks. Re.
finery activity in the Nation followed a similar pattern.
Daily average crude runs to refinery stills in the District in
Janu ary were 7 percent higher than a year earlier, with the
Nation showing a comparable gain of 6 percent.

43

N(lR'ftEAST
CENTAAL

h.

N 04'In~

1~

W[!tf CENU .. L

• • W[ $T

9 . NORTI'!
10

PANHANDL[

Imports of crude oil and refined products are estimated to
have reached an all· time high in January, averaging more
than 1,100,000 barrels per day, compared with 950,000 bar·
rels a year earlier.
The requirement that natural gas distributors in desig·
nated states in the Northeast secure approval of the Petro·
leum Administration for Defense before extending services to
new customers - industrial as well as residential- has
been rescinded, effective March 1. This order, imposed
August 22, 1951, was designed to prevent shortages of gas
which would deprive defense plants of essential fuel. Despite
the rescinding of the order, gas supplies still are not entirely
adequate; in fact, the potential demand is expected to exceed
the supply in certain areas for some time. The PAD deputy
administrator indicated that some local controls over the
ex tension of natural gas use probably will have to be retained.

MONTHLY BUSINESS REVIEW
Final estimates by state employment commissions show that total
nonagricultural wage and salary
workers in the five states lying
wholly or partly within the District
numbered a record 3,915,400 workers in December, 2 percent more than in November and 4 pcrcent above December
1951. Manufacturing wage and salary workers totaled 732,600, for a year-to-year gain of 6 percent.
Employment in the District was dOll'n seasonally in January and February, although still above year-earlier levels_ It
is estimated unofficially that nonagricultural wage and
salary workers in February totaled approximately 3,835,000
workers and that manufacturing employment declined to
about 726,000 workers.
Weekly wages for manufacturing workers in the fIve states
in December averaged $68.39, reflecting an increase of approximately $4.38 over a year earlier. On the other hand,
their hours worked per week averaged lower, or about 43
hours per week.
NONAGRICULTURAL EMPLOYMENT
Five Southwestern States 1
Percent chonge

Dec. 1952 from

Number of persons
December
Type of employment

1952.

December

November

Dec.

No....

1951

1952

195 1

1952

3,763,400
689,000
3,074,400
22 1,200
277,900

3,845,500
736,100
3,109,400
228,300
287,100

410,300
984,200
133,300
423,300
624,200

412,100
976,000
144,300
441,500
620,100

Total nonagricultural

wage and salary Work.fS ..• 3,915,400
MClnufacfurlng •• ••.•• . •..
732,600
Nonmanufacturing ........ 3,182,800
Mining • •..•..••• ......
229,000
Construction ••• •.... ...
283,600
Transportation and public
utilities ••.... .... ...•
414,800
Trade .•.............. 1,018,900
Finance •••••••••••••••
145,300
Service •••••••••••••••
440,800
Government •••••••••••
650,400

4.0
1.8
6.3
-.5
3.5
2.4
3.5
.3
2.1 -1.2
1.1
3.5
9.0
4.1
4.2

rates between eastern and southwestern railroads. The new
formula eliminates the bonus granted southwestern railroads .
because of a lower total revenue compared to eastern railroads. In taking this step, the Commission recognized the
industrial and population growth in this area. The division
of the revenues will now be made on a straight mileage basis.
The change ordered by the Commission afIects the division of
the revenues between participating carriers but does not
aff<ct existing rates.
VALUE OF CONSTRUCTION CONTRACTS AWARDED
(In thousand. of dollars)
Jonuory
1952

January

1953

Area and type
ELEVENTH DiSTRiCT.................
Residential ..................... .
All other • ... .. .. ...... ..........

UNITED 51 ATESI • ..................
Residential . .................... .
All other ...... . .......... . ... .. .

$

95,669
48,613
47,056
1,075,868

$

460,036
615,832

76,190
34,730
41,460
902,091
337,721
564,370

December

1952

$ 178,167
37,048
1'1.119

1,467,384
438,580
1,028,804

I 37 stotes east of the Rocky Mountains.
SOURCE: F. W. Dodge Corporation.

The value of consLruction contracts awarded in the District in January totaled $95,669,000, the second highest for
any January on record, although only about half the all-time
monthly record established in December. The January total
was divided almost equally between residential and nonresidential construction, as shown in an accompanying table.
Contracts awarded for residential construction were valued
at $48,613,000, which had heen exceeded in only two of the
previous 18 months. Awards for nonresidential construction
were valued at $47,056,000, which is below most months of
1952. Construction trends in the United SLa tes in the past
few months followed a pattern similar to that in this District.

.7
4.4
.7
-.2
4.9

BUILDING PERMITS
Percentage
change in
vo luation from

I Arizona, Louisiana, New Mexico, Oklahoma, and Tex.as.
p-Pr.liminary.
SOURCE: State employment agencies.

January 1953

Jon.
City

A report released by the Texas Employment Commission
indicates that 442 new fIrms employing eight or more workers each opened in Texas in 1952. Total employment for
these new firms is estimated at 17,896 workers. Wholcsale
and retail trade establishments represented 41 percent of
the new firms, while manufacturing and contract construc·
tion accounted for 20 percent each. Of the total number of
workers hired by these new firms, manufacturing establishments and wholesale and retail trade firms employed about
one-third each, while new contract construction firms employed about 17 percent.

Number

Shreveport. . . . . . . . . . . . . . . . . . . . . . . . . .
TEXAS
Abilene.............................

327
109
278
236
233
458
1.528
249
837
76
1,026
274
123
1,801
203

1952

Dec.
1952

$ 2,531,627

127

87

556,665
1,902,836
2,801,691
1,364,159
2,748,342
10,899,096
2,085,635
3,620,130
960,291

113
19
72
696
86
72
63
13
707
15
81
-63
_45
-11
-26
31

Valuation

LOUISIANA

The Interstate Commerce Commission has announced a
change in the formula for the division of revenue from joint

74

3,436,524
596,551
553,675

-10
2
89
16
126
77
148
21
356
3
87
-11
10
-53
-91

Totol ....... ... ........ . . . ............ 7,832

Recent reports show that the sulphur producing capacity
of facilities in the District was increased by 520,000 long
tons on an annual basis in 1952. Of this increase, 77 percent
is being produced by the Frasch process, 17 percent from
sour gas, and 6 percent from refinery gas. New plants in
Texas account for 99 percent of the total increase.

f

$45,942,801

18

Amarillo.. • . •........ •... . • • ..•. ....

Austin...............................
Beaumont. . . . . . . . . . . . . . . . . . • . . . . . . . .
Corpus Chrl,n. . . . . . . . . . • . . . . . . . . . . . . .
Dalla,. . . . . . . . . . . . • . . . • . . . . . . . . . . . . .

EI Poso. ............................
Fort Worth. . . . . . . . . . . . . . . . . . . . . . . . . .
Galve'ton........ . .. ........... . .. ..
Houston ..... . . . . . .... . •..... ... .....
Lubbock. . . . . . . . . • . . . . • . . . . • . . . . . . . .

Port Arthur. . . . . . . . . . . . . . . . . . . . . . . . . .
Son Antonio. . . . . . . . . . . • . . . . • • . . . . . ..

Waco..............................
Wichita Falls.... . . . . . . . . . . . . . . . . . . . . .

9,553.209
2,104,238
228.132

Fi nal reports on construction activity 111 Texas in 1952
show that construction contracts were signed providing for
55,240 dwelling units in new residential buildings. This compares with 50,276 in 1951 and is only slightly below the
record 55,284 reported in 1950. The gain in 1952 over the
previous year was in the constr uction of one-family dwellings, as construction of apa rtments and duplexes was off
substantially,

~

~


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102