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A

.
.S
U
N
PORT O
E
R

THESE
A R E

T H E

GOOD
O L D
◆

LI

DAYS

G STAN D
N
I
V

DS

◆

AR

FEDERAL RESERVE BANK OF DALLAS
1993 ANNUAL REPORT

CONTENTS

PRESIDENT’S MESSAGE
THESE ARE

THE

GOOD OLD DAYS

THE YEAR

1
2

REVIEW

26

BOARDS OF DIRECTORS

30

ADVISORY COUNCILS

31

CONDITION

32

OPERATIONS

33

STATEMENT
STATEMENT

OF

OF

IN

STATEMENT

OF

SURPLUS

34

VOLUME

OPERATIONS

35

OFFICERS

36

OF

President’s Message

L AST YEAR, our annual report essay was

knowledge and wisdom, and we will miss them all.

entitled “The Churn: The Paradox of Progress.” It
focused on the creative destruction taking place in

At the Dallas Office we lost two very special
friends and board members: Tom Frost and Leo

the labor market. It showed how small net changes

Linbeck. It is often said that Texas lost nine out of its

in the employment and unemployment numbers

10 largest banks. Tom runs the tenth. He is widely

obscure the large-scale destruction of old jobs and

respected as the dean of Texas banking. He just

the creation of new jobs. This churning renews and

completed six years as a director of the Dallas Fed,

revitalizes our economy and keeps it competitive in

following earlier service as a member of our Federal

a rapidly changing world.

Advisory Council. Tom is a

This year’s essay might

gentleman and scholar.

have been entitled “Churn II,”

Better yet, a Texas gentle-

because it shows the progress

man and scholar. Our Bank

that society is able to reap if

has benefited greatly from

it allows the churn to

Tom’s wisdom, dedication

happen. Instead, we are

and years of service.

calling this essay “These Are

Leo Linbeck just com-

the Good Old Days.” It

pleted his seventh year as

focuses on the dramatic

a Board member, the last

changes that have taken place
in our living standards that

two as chairman. We
drafted Leo for an extra

GNP figures fail to capture.

year on the Board to

While traditional measures

enable him to complete

may suggest the economy has

our building project.

been sluggish in recent years,

Thanks, Leo. Thank you

in many respects, these are

for our building and for

the good old days. Our point

your friendship. Thank you

is not to deny the slowdown

for all the work you do

in productivity growth or the

behind the scenes, without

potential growth rate of real

fanfare or recognition, for

GNP over the past two

our country.

decades. Annual growth of 2-and-a-half percent is

As we work day to day and year to year, it’s

not good enough. Our point is that wonderful

easy to lose sight of the small steps that lead to giant

changes are taking place in the way we live that

strides—both for the Dallas Fed and in the broader

should not be ignored in assessing trends in our

sense. As we reflect on progress in this annual report,

standard of living. As you review developments you
are already familiar with, I think the cumulative

we are challenged by the new year ahead and look
forward to providing strong leadership in areas

impact of the changes will astonish you.

supporting free enterprise—the system that has

The Dallas Fed has had some recent churning of

enabled each generation of Americans to make the

its own. Each year some of our directors move on and

claim that “these are the good old days.”

others take their place in a process of renewal. We
just said goodbye to Clive Runnels from our Houston
board, Diana Natalicio from the El Paso board and
Javier Garza and Sam Sparks from our San Antonio

Robert D. McTeer, Jr.

board. They gave us freely the benefit of their

President and Chief Executive Officer

1

2

THESE
A R E

T H E

GOOD
O L D
◆

DAYS

G STAN D
N
I
V

RIP VAN WINKLE WAKES
SPRING DAY IN

1994

DS

◆

LI

A

.
.S
U
N
PORT O
E
R

AR

TO A BRIGHT

AND, RUBBING HIS EYES,

QUICKLY REALIZES THE WORLD AROUND HIM HAS
CHANGED.

HE

DISCOVERS ALMOST

25

YEARS HAVE

FLOWN BY SINCE THE START OF HIS BIG SLEEP.

AMONG HIS LAST MEMORIES BEFORE DOZING OFF
IN 1970: WATCHING GEORGE C. SCOTT PORTRAY
PATTON AT A MOVIE THEATER, SEEING ROWAN &
M A R T I N ’ S L A U G H -I N O N T E L E V I S I O N A N D

3

These Are The Good Old Days

Growth of U.S. Gross National
Product, 1870–1990

listening to the Beatles’ Let It Be. President Richard
Nixon had ordered U.S. troops into Cambodia to
attack Viet Cong bases. New York’s once-hapless
Mets had become the “Miracle Mets,” starting the
1970 season as World Series champions.
Events since 1970 seem world-shaking. The
Soviet Union has fallen apart. The global village has
grown together. Yet what amazes Rip the most is the
tremendous economic progress the United States has
made in just a quarter of a century.
Americans in the 1990s routinely withdraw
money from automatic teller machines all over the
world. We communicate on cellular phones, cook
meals in minutes using microwave ovens, watch
movies at home on videocassette players, listen to
concert hall-quality music on compact discs and flash
instant messages from one computer to another on a
global grid called Internet. Americans figure checking-account balances on pocket calculators, use
camcorders to film our children playing soccer, fight
ulcers and depression with new wonder drugs, flick
many things on and off by remote control. We have
more cars, more household appliances, more vacation homes, more entertainment options and more

Percent
6
5

3
2
1
0
–1
1870– 1890– 1913– 1929– 1938– 1950– 1960– 1973–
1890 1913 1929 1938 1950 1960 1973 1990

*Average is for 1870–1973.

free time than Americans two decades ago.
The contrast between American life then and
now is astounding. Rip surveys the changes and concludes Americans never had it so good. He is
puzzled, though, that so few people share his sense
of wonderment. People seem glum about the U.S.
economy of the 1990s and look back to the time Rip
went to sleep—the late 1960s and early 1970s—as
the apex of American prosperity. People reflect on
that time as “the good old days” from which the U.S.
standard of living has ebbed.
Americans of the 1990s point Rip to many signs
of lost vitality in the U.S. economy. Growth is slowing
to a crawl. Productivity is stagnating. Paychecks are
getting smaller and, for many workers, less certain.
Other countries are gaining on us, even as more American families earn two incomes. (See “Catching Up”
at the end of this essay.) Worst of all, perhaps, some
Americans worry that their country, for the first time in
its history, will fail to provide today’s children with
living standards as high as their parents’. As if economic deterioration weren’t enough, discouraging
reports on crime, education, homelessness and other
social ills plague the country in the 1990s.
The usual barometers of economic activity show
cause for alarm. Inflation-adjusted manufacturing
wages rose by 2 percent a year from 1950 to 1973,
but they fell an average of 1.3 percent a year from
1973 to 1990. Inflation-adjusted median family income gained 3 percent a year from 1950 to 1973, but
the annual increase ebbed to 0.1 percent in the past
two decades. Productivity, a yardstick of the output
from each hour of work, grew at an annual rate of
2.2 percent from 1870 to 1973, then slowed to 1 percent. The broadest measure of the economy’s well-

The World Through Rip’s Eyes

Average size of a new home (square feet)
New homes with central air conditioning
People using computers
Households with color TV
Households with cable TV
Households with VCRs
Households with two or more vehicles
Median household net worth (real)
Housing units lacking complete plumbing
Homes lacking a telephone
Households owning a microwave oven
Heart transplant procedures
Average work week
Average daily time working in the home
Work time to buy gas for 100-mile trip
Annual paid vacation and holidays
Number of people retired from work
Women in the work force
Recreational boats owned
Manufacturers’ shipments of RVs
Adult softball teams
Recreational golfers
Attendance at symphonies and orchestras
Americans finishing high school
Americans finishing four years of college
Employee benefits as a share of payroll
Life expectancy at birth (years)
Death rate by natural causes (per 100,000)

1970

1990

1,500
34%
<100,000
33.9%
4 million
0
29.3%
$24,217
6.9%
13%
<1%
<10
37.1 hours
3.9 hours
49 minutes
15.5 days
13.3 million
31.5%
8.8 million
30,300
29,000
11.2 million
12.7 million
51.9%
13.5%
29.3%
70.8
714.3

2,080
76%
75.9 million
96.1%
55 million
67 million
54%
$48,887
1.1%
5.2%
78.8%
2,125*
34.5 hours
3.5 hours
31 minutes*
22.5 days
25.3 million
56.6%
16 million
226,500
188,000
27.8 million
43.6 million
77.7%
24.4%
40.2%**
75.4
520.2

Avg.*
3.5%

4

*Figures are for 1991. **Figure is for 1992.

4

A Report On U.S. Living Standards

By far, the largest omission in measured GNP is
leisure—time for recreation, family, friends, entertainment, hobbies or just taking it easy. By the choices
we make about work hours as incomes rise, Americans show we value leisure highly. Yet because time
off from work isn’t traded in the marketplace, a trend
toward greater leisure in recent decades counts for
nothing in the GNP measure of standard of living.
The GNP numbers also ignore the value of services produced and consumed in the home—cooking meals, doing laundry, mowing the lawn, washing
the car and dozens more chores. Over time, many
household tasks have been shifted toward the market, allowing families even more leisure. As families
pay for household chores, GNP data reflect these
transactions but can distort comparisons of GNP from
one generation to the next.
Time also brings new and improved products that
enhance our lives in ways unavailable to previous generations at any price. Each innovation—air conditioners
that use less energy, cars that handle more safely,
cable television companies that deliver new programs
into the home, foods with lower cholesterol and
fat—raises the value of these goods and services and
lifts consumers’ standards of living. Yet various studies
suggest that the GNP statistics don’t adequately account
for improvements, over time, in product quality.

being—gross national product, or GNP—sends perhaps the most troubling signal of all. Even with the
Great Depression of the 1930s, GNP expanded by an
average of nearly 3.5 percent a year from 1870 to
1973. To the dismay of many Americans, the growth
rate slipped to an annual average of less than 2.5
percent in the past two decades.
The two versions of reality could hardly be more
at odds. One says the country continues to reap the
ever-larger bounty promised by free enterprise; the
other, that the increase in Americans’ standard of living has slowed markedly in recent years. A loss of
dynamism—if real—would challenge Americans’
view of who we are. The notion of a falling living
standard affronts the American dream, one of the
ideals that hold the nation together. It challenges the
ingenuity of those in power, confronting them with
the task of getting America moving again. Most
broadly, it threatens Americans’ faith in the free enterprise system at the very moment of its historic triumph over communism.

GNP Is Not Standard of Living
As Rip learned, there are both bleak and bright
views of America’s economic progress. To unravel
the conflict between them, we must understand how
society’s standard of living is measured. As a gauge
of well-being, economists and policymakers usually
rely on GNP, a simple sum of the market value of
goods and services our nation churns out in a year.
Every measure of how the economy is faring in some
way derives from this aggregate. Growth is the percentage change in GNP, usually adjusted for inflation
by a price index. Productivity divides the inflationadjusted, or real, GNP by the total number of hours
worked. Per capita income apportions an equal
share of real GNP to each person.
At best, GNP offers only a crude measure of
Americans’ well-being. The meter for GNP is dollars
and cents or, through the magic of a price index, real
goods and services. The meter for standard of living
is happiness, an elusive concept. Even without consulting a philosopher, it’s clear they aren’t the same.
GNP is not standard of living.
By design, GNP counts only a fraction of what
human beings might want in a better life. GNP figures
ignore the contribution to people’s lives of anything,
good or bad, that’s not explicitly bought and sold on
the open market. For the most part, this is a practical
matter: statisticians report what’s measurable. Markets
give objective, easily calculated monetary values to
shoes, televisions, haircuts, trips to Hawaii—a whole
panoply of goods and services.

What GNP Doesn’t Tell Us About Living Standards
GNP is not standard of living. The two concepts are related, but standard of living has a
much broader meaning. GNP does not reflect many factors that affect living standards.
Among these are leisure, the value of goods families produce for personal use and
conditions of life, such as health and safety, crime, pollution and longevity. GNP, in turn,
includes some elements that do not affect today’s living standards, such as investment
spending.

Standard of Living

Leisure

Living
Conditions
Home
Production
and
Consumption

Market
Consumption

Government
Purchases

Investment
GNP

5

The dollars-and-cents statistics of GNP just can’t measure the value of some
things—like extra time for basketball.

6

A Report On U.S. Living Standards

lieve, surveys show the country has never had as
much leisure. What’s more, evidence from spending
patterns and elsewhere suggests that today’s Americans are using their time off to squeeze more recreational activities into their lives.
Over the past four generations, the time an average U.S. employee devotes to on-the-job work decreased by nearly one-half. Looking at just the most
recent two decades, when concerns about American
living standards became more pronounced, work
hours declined an additional 9.3 percent, the equivalent of 23 days a year.
Daily work hours aren’t the end of what’s happening to leisure. Americans are starting work later
in life and, perhaps even more significant, they are
enjoying longer periods of retirement. In the two decades after 1970, the age at which an average worker
entered the labor force pushed forward by seven
months. A typical retirement grew by more than four
years. In addition, the average daily time devoted to
household chores fell consistently—from 4 hours, 12
minutes in 1950, to 3 hours, 48 minutes in 1973, to
an estimated 3 hours, 30 minutes in 1990. Over a
year, 18 minutes a day aren’t trifling: they add up to
more than four extra days off.
Interestingly, the value of work at home might
not be declining along with the time spent doing
chores. Microwave ovens, no-iron fabrics, self-cleaning ovens, frost-free refrigerators and dozens of other
conveniences make household work lighter and
faster. In effect, technology is boosting household
efficiency by enabling us to accomplish more with
the same or less effort.

Nor does GNP track a host of other important,
nonmarket components of a higher quality of life—
longevity, health and safety, working conditions, the
environment. These aspects of daily life vary greatly
from place to place, from one person’s experience to
the next, but there’s evidence that they’ve improved
decade by decade for most Americans.
It’s no easy task to translate much of what’s not
measured by GNP into dollars and cents. There are
inherent difficulties in valuing leisure, home production, product quality, living conditions and whatever
else might go into the true standard of living. Yet
moving beyond narrow GNP to a broader notion of
Americans’ well-being will help provide a more accurate—and, to many, surprising—view of how well
the nation is doing. There’s no denying the country
would be better off with a faster pace of economic
expansion (See “Secrets of Growth” at the end of
this essay.) The supposedly lackluster 2.5-percent
GNP growth of recent decades, though, doesn’t capture all the gains in living standards. The omissions
and lapses suggest that GNP, as it comes out of the
government’s statistical mills, may understate the true
income of Americans, perhaps by a large margin.

Time For Symphonies and Softball
Time is the ultimate scarce resource. Each day
contains 24 hours. Each week consists of seven days.
In a fast-paced, modern society, once work and
chores are done, there almost always seems to be a
shortage of time for what we enjoy. Many workers
complain about haggard, sleep-deprived lifestyles.
Yet, as hard as it may be for many Americans to be-

Work Time
Since 1870, Americans’ hours on the job have been cut almost in half. Even since 1970, we’ve shortened the workweek and
gained extra vacation days and holidays.

YEAR

WORKWEEK
(HOURS)

WORKDAY
(HOURS)

WORKWEEK
(DAYS)

ANNUAL
HOURS
PAID FOR

VACATION
(DAYS)

HOLIDAYS
(DAYS)

OTHER
ABSENCE
(DAYS)

ANNUAL
HOURS
WORKED

1870
1890
1913
1929
1938
1950
1960
1973
1990

61
58.4
53.3
48.1
44
39.8
38.6
36.9
34.5

10.2
9.7
8.9
8
8
8
7.7
7.4
7.3

6
6
6
6
5.5
5
5
5
4.7

3,181
3,045
2,779
2,508
2,294
2,075
2,013
1,924
1,799

0
0
5
5.5
6
6.5
7
8
10.5

3
3
3.5
4
4.5
6
7
7.5
12

8
8
8
8
8
9
9
9
10

3,069
2,938
2,632
2,368
2,146
1,903
1,836
1,743
1,562

7

These Are The Good Old Days

childhood, with more years of schooling, and a period
of leisure after years of work are strictly modern
expectations.
When jobs and work at home are combined,
virtually all segments of society worked less in 1990
than they did two decades before. The gain in leisure
was a minuscule few minutes a week for employed
men. Thanks largely to labor-saving appliances and
other helping hands, women who didn’t work outside
the home reaped 10 extra hours of leisure. Employed
women saw a six-hour decline in total work. A trend
toward more women taking jobs creates one caveat.
Women who used to stay at home and now hold jobs
may have increased their work—by about 13 hours
a week. Inflexibility in the labor market typically requires them to put in a full week, and household
chores await at the end of each day. Nevertheless,
women with jobs spend less time on housework than
their counterparts did 20 years ago, and they are
compensated with higher incomes.
But does having more free time translate into
higher living standards? Statistics from the government and trade groups indicate Americans are spending more time and more money on recreation. From
1970 to 1991, the number of Americans who play
golf regularly doubled to 11 percent of the population. Even after adjusting for population growth, the

Today, the typical employee spends less than
a third of all waking hours working, either at home
or on the job. When totaled, the results are mindboggling: workers, on average, have added nearly
five years of waking leisure to their lifetimes since
1973. A look back 120 years shows that an extended

Less Work, More Leisure
Today’s workers may feel pressed for time, but, as a nation, we start to work
later in life and work fewer hours than earlier generations. In 1870, Americans
could expect to spend 39 percent of their waking hours at leisure. Now, the
time we spend in childhood, vacations, evenings, holidays and retirement adds
up to 70 percent of our waking hours.

ACTIVITY
Age starting work (avg.)
Life expectancy (years)
Retirement age (avg.)
Years on job
Retirement (years)
Annual hours worked
Annual hours home work

1870
13
43.5
death
30.5
0
3,069
1,825

1950
17.6
67.2
68.5
49.6
0
1,903
1,544

1973
18.5
70.6
64.0
45.5
6.6
1,743
1,391

1990
19.1
75.0
63.6
44.5
11.4
1,562
1,278

LIFETIME HOURS
Working at job
Working at home
Waking leisure

93,604
61,594
99,016

94,389
81,474
216,854

79,307
67,151
266,129

69,509
59,800
308,368

Three Profiles of a Lifetime
5

13
Home Production
Work at Job

1870

Waking Leisure
Sleep

0
(Birth)

43.5
(Death)
7

17.6

1950

0
(Birth)

67.2
(Death)
10

19.1

10

20

63.6

1990

0
(Birth)

30

40
Age

8

50

60

70

75
(Death)

Innovative products are freeing Americans to work
when, where and how we choose.

9

New products can make our lives safer, easier—or just more fun.

10

A Report On U.S. Living Standards

number of adult softball teams jumped sixfold in two
decades. In 1970, a quarter of Americans bowled;
now, a third do. Ownership rates rose 50 percent for
recreational boats and more than doubled for vacation homes. Pleasure trips per capita rose from 1.5 a
year in 1980 to 1.8 in 1991. Average attendance at
baseball games rose from 16,100 in 1973 to 31,377 in
1992. Football, hockey, basketball, golf and car racing
are drawing bigger crowds—in person and on television. Cultural activities haven’t been short-changed.
Per capita attendance at symphonies and operas
doubled from 1970 to 1991. We’re reading more
books; annual sales rose from 6.6 per person in 1974
to 8.1 in 1991.
Money going to leisure activities has risen rapidly, too. From 1970 to 1990, spending rose from
$1.2 billion to $4.1 billion for recreational vehicles,
$2.7 billion to $7.6 billion for pleasure boats and $17
billion to $44 billion for sporting goods. Total recreational spending, adjusted for inflation, jumped from
$91.3 billion in 1970 to $257.3 billion in 1990, an
average annual gain of 9.1 percent that well outstrips
population growth of 1 percent a year. In 20 years,
the money consumers allocated to recreation increased from 5 percent of total spending to nearly
8 percent.
The fact that Americans cram their off-work
hours with all these recreational activities suggests
we’re wealthier—financially better off to make use of
the time off we’ve gained. Work hours and family
budgets reveal what GNP numbers don’t: an explosion of leisure is improving the American lifestyle.

Out of the Home and into the Market
As U.S. living standards have risen, and especially as more women
have entered the work force, chores once done by family members
have become services provided by the marketplace.

HOME ACTIVITY BUSINESS OR INDUSTRY
Yardwork
Mow the lawn
Prune trees
Trim bushes
Weed and fertilize
Install sprinklers

Lawn mowing
Tree service
Yard maintenance
Lawn and garden care
Yard service

Clothing
Wash and dry clothes Maid, dry cleaning
Iron, starch and fold clothes Laundry, dry cleaning
Sew, knit and tailor garments Clothing makers, tailors

Food
Grow fruit and vegetables
Raise livestock
Preserve fruits and vegetables
Slaughter and cure meat
Cook and serve meals
Clean the dishes

Farming
Ranching
Canning, packaging
Butchery
Restaurant, catering
Restaurant

Household maintenance
Clean house
Wash windows
Shampoo rugs
Clean drapes
Make minor repairs
Repair appliances
Paint the house
Make or restore furniture
Build homes or additions
Design the home
Decorate the home
Exterminate pests

Maids
Window cleaning
Carpet and rug cleaners
Drapery cleaners
Plumber, electrician
Appliance repair
House painting
Furniture, upholsterers
Home building, construction
Architects
Interior decorators
Pest control, exterminator

Family finances

The Lost Art of Canning Vegetables

Fill out tax forms
Establish a financial plan
Manage investments
Prepare will, legal documents

One way critics put down the U.S. economy is
to say, “We’re becoming a nation of hamburger flippers.” Truth is, however, somebody always flipped
hamburgers, or at least did the equivalent in preparing daily meals, usually in the home. In fact, running
a household requires a daunting list of chores—
cooking, cleaning, gardening, child care, shopping,
banking, ferrying family members to ballet lessons
and soccer practice.
As Americans grow richer, many chores once
done by family members are moving out of home
production and into the market or, like gardening
and canning, becoming hobbies rather than necessities. More so today than in the past, it’s more efficient
for workers to spend time earning money doing
what they do best on the job, then pay others to perform at least some household tasks. In modern
economies, market alternatives to home production
are readily available. To the extent they can afford it,

Accountants, tax preparers
Financial planners
Brokerages
Lawyers

Personal care
Cut and set hair
Groom (manicures, facials)
Educate children
Babysit
Administer health or medical needs
Care for the elderly
Exercise (jogging, calisthenics)

Barber, beauty salon
Beauty shops
Schools, colleges
Child care centers
Doctors, hospital
Nursing home
Health and fitness centers

Automobiles
Maintain vehicles (change oil) Auto service station
Wash and vacuum vehicles Car wash
Repair vehicles Auto repair

Miscellaneous
Make gifts
Care for pets
Cut and split wood
Repair mowers, bikes

11

Gift and craft shops
Kennel, veterinarian
Firewood, central heating
Machine shops

These Are The Good Old Days

There’s a paradox in the GNP method of accounting. If a person were to marry his or her doctor (gardener, plumber, hair dresser, tax accountant and so
forth) and no longer pay for these services, measured
economic activity would decline by the amount of the
professional fee. The family’s true standard of living,
however, would remain unchanged. This distortion
reveals that GNP understates living standards by the
value of what’s produced and consumed in the
home. Estimates suggest home production, if properly accounted for, would have boosted America’s
1992 GNP by about a third, or $2 trillion.
Failure to properly account for households’
nonmarket production probably wouldn’t skew
growth rates if the proportion of home and market
consumption remained stable over time. The data
show, however, that home production fell steadily
from 45 percent of GNP at the end of World War II to
33 percent in 1973. It then leveled off. What was the
impact on measured growth? The transfer of household chores to the market added 1.3 percentage
points to measured annual GNP growth prior to
1973, implying an underlying growth rate for the
period of just 2.2 percent. Adjustments after 1973 are
insignificant. Merely recognizing the contribution of
household production could bring growth rates of
the past two decades into line with those experienced in the 1950s and 1960s.

New and Improved
From gadgets to wonder drugs, the list of products available to
Americans gets longer by the day.

A sampling of new or greatly improved products since 1970
Microwave oven
Videocassette recorder
Camcorder
Laser printers
Voice mail
Cordless phone
Cellular phone
Personal computer
Ultrasound
Answering machine
Home security systems
Small-screen TVs
Synthesizers
CDs and CD players
Pagers
Remote controls
Quartz/digital watches
Sound systems
Fax machines
Digital/LED displays
Coffee makers
Video games
Electronic date books
Food processors
Electric knives
Aspartame
In-line rollerskates
Interactive toys
Miniature radios
Cable TV
Exercise equipment
Airbags
All-terrain vehicles
Medical advances since 1970
Cosmetics (Retin-A)
CAT-scan
Organ transplants
Radial kerotonomy
Artificial pancreas
Monoclonal antibodies
Painkillers
In vitro fertilization
(acetaminophen,
Soft contact lenses
ibuprofen)
Cornea transplants
Cosmetic surgery
Decongestants
(facelifts, implants,
Anti-allergenics
liposuction)
Home pregnancy tests
Biosynthesized drugs
Anti-depressants
(recombinant DNA
Anti-ulcer drugs
techniques)

Not Just More, But Better, Too
In judging whether Americans are better off,
what should matter most are goods and services that
bring enjoyment, provide convenience or reduce discomfort. In other words, the focus ought to be on
consumption—the bulk, but not all, of GNP. Artifacts
of everyday life provide proof of rising consumption
during the past quarter century. The average number
of televisions in a household rose from 1.4 in 1970 to
2.1 in 1990. Among those 15 years and older, passenger vehicles per 100,000 people increased from
61,400 in 1970 to 73,000 in 1991. Americans are enjoying more luxuries, too. The average amount spent
on jewelry and watches, after adjusting for higher
prices, more than doubled from 1970 to 1991.
Many Americans live in bigger and better
houses. From 1970 to 1992, an average new home
increased in size by the equivalent of two 15-foot by
20-foot rooms. New houses are much more likely to
have central air conditioning and garages. What about
stories that fewer U.S. residents can afford the essential piece of the American dream—a home of their
own? The data don’t support it. The rate of home
ownership has held steady at around 65 percent of

households hire professionals to cook, clean, paint,
design landscapes, figure taxes and much more.
Americans, for example, are finding ways to
ease the burden of cooking at home. In 1993, restaurants received 43 percent of the country’s spending
on food, a big gain from the 33 percent of 1972. Eating out, once an occasional luxury, has become a
way of life. Even when we eat at home, we often
rely more on market goods—heat-and-serve products, microwave meals and carry-out items. Usually,
these shortcuts raise the cost of feeding a family, but
as consumers become wealthier, they often opt to
pay extra for ease and convenience. Entrepreneurs
haven’t missed the trend away from home production: nearly all businesses whose services replace
home production have shown strong gains in employment and sales in recent years.

12

Medical breakthroughs are enhancing and prolonging our lives.

13

With today’s technology, almost no place is out of reach.

14

A Report On U.S. Living Standards

their own, make our lives safer, easier, more convenient or just plain more fun.
Few facets of life are untouched by the arrival of
new and better products, and GNP’s measurement of
consumption can easily fall short of properly accounting for improvements in quality. The traditional measures of standard of living—real per capita income,
for example—use an index to compensate for rising
prices. Statisticians can calculate exactly what Americans pay for cars, clothing, computers and clocks
and occasionally try to adjust for better quality, but
even their best efforts aren’t likely to keep pace with
the dizzying blitz of new products and features in a
dynamic global economy.
Price indexes, too, are apt to understate gains in
product longevity, new features or better performance. The price of a tire, for example, rose from $13
in the mid-1930s to about $70 in early 1994, entering
into a price index for tires as an increase of about 1.5
percent a year. However, today’s steel-belted radials
last more than 10 times longer than the old four-ply
cotton tires. Based on cost per 1,000 miles, tires now
actually sell for less than half what they did 50 years
ago. Even more astounding, an average worker in
the 1930s worked almost four hours to buy those
1,000 miles. Today, the cost is less than five minutes.
The benefits don’t stop there: drivers in safer cars are
better off because they have fewer accidents, reducing the amount of time and money spent on repairs.
Safer highways may lower GNP, but they raise the
standard of living.
Quirks of this sort permeate the price indexes.
Modern fabrics last longer and require less care, adding to the value of clothing and linens. Frost-free
refrigerators make the messy chore of defrosting a
fading memory. In just the past decade, computers
and the software to run them improved in speed,
memory and ease of use by leaps and bounds. The
rapidly rising cost of health care is a major national
issue, but at least part of the increase in hospital fees
and drug prices is the result of better quality. Car
lovers may wax nostalgic about the Corvettes and
Mustangs of yesteryear, but today’s cars go farther on
a gallon of gas. What’s more, they’ve been improved
with antilock brakes, fuel injectors, turbochargers,
cruise control and sound systems that outperform
even the home stereos of 1970. Today’s cars, with as
many as 25 tiny microprocessors aboard, require less
maintenance, too.
Price indexes are also slow to incorporate the
myriad of new products coming into common use.
Pocket calculators entered the U.S. consumer price
index in 1978 — only after the prices for these

the population since 1970, and there’s overwhelming
evidence that today’s houses are stocked with more
appliances and gadgets than ever.
Microwave ovens, color televisions, videocassette recorders, answering machines, food processors, camcorders and exercise equipment are all now
standard in many American homes. Three-quarters of
U.S. homes had a clothes washer in 1990, up from
less than two-thirds in 1970. At the same time, ownership of dryers jumped from 45 percent of households to almost 70 percent. About 45 percent of
homes had dishwashers, up from 26 percent two decades ago. Between 1970 and 1990, the typical U.S.
household gained 4.5 times more audio and video
products, more than twice as much gear for sports and
hobbies, 50 percent more in kitchen appliances and
30 percent more in furniture. In short, most Americans consume far more than previous generations.
Of course, we could be paying for our consumption by depleting our savings. The evidence, however, says it isn’t so. Although Americans may not set
aside as much as people in many other countries, the
average American still has managed to gain net
worth. The stock of real wealth per capita rose by 2
percent a year from 1970 to 1990. The nation has had
the best of two worlds: consuming more in the
present and setting aside more for the future—not a
bad standard for “better off.”
The news gets even better. As consumers,
Americans can now possess products that didn’t even
exist for past generations. Twenty years ago, only a
lucky few could show movies at home. Today, two
of every three U.S. households own videocassette
recorders. When Elvis was king of rock ’n’ roll, many
of his records succumbed to warps and scratches.
Today’s compact discs give us concert hall-quality
sound. A decade ago, most motorists had to search
out a pay telephone to make a call. Today, cellular
technology has put a phone in millions of cars. Companies served 11 million subscribers in 1992, up
from a mere 92,000 in 1984. The past 20 years also
brought many important medical breakthroughs—
new drugs, new treatments and new diagnostic
tools—to enhance and prolong our lives.
We hardly notice many innovations that improve
service. Fiber-optic cables greatly expand the capacity
of telephone lines. Lasers on cash registers help
speed us through check-out lines by scanning bar
codes. Airbags await to cushion us from the impact
of traffic accidents. Microprocessors guide pilots and
air-traffic controllers. Doppler radar makes weather
forecasts more reliable. These and a host of other
products, many embedded with tiny silicon brains of

15

These Are The Good Old Days

Quality of Life

smaller, more powerful models fell by 98 percent
from those of the electromechanical desktop devices
they replaced. Statisticians missed 99 percent of the
price decrease in penicillin. The list could go on:
quality improvements are widespread in an age of
advanced technology, with new products coming to
the market just about every week.
Any failure to properly account for better quality
makes price indexes exaggerate increases in the cost
of living. Economists frequently debate the extent of
upward bias in inflation, but some studies suggest
the bias might be significant—from a low of a third
of a percentage point a year to as much as 2 percentage points over the past two decades. When price
indexes overcompensate for inflation, they make
GNP growth seem smaller than it actually is.
Price-index problems have always existed. New
products have been introduced and improvements in
quality have taken place in previous eras, but there’s
reason to believe they are greater now, during rapidly expanding technology and trade. Companies
face intensifying competition and shrinking product
cycles: the latest breakthroughs and updated models
seem to be coming faster and faster. Record players
reigned for decades before cassette tapes. The time
between cassettes and compact discs was much shorter.
Now, digital audio tape and recordable CDs are
arriving. New models of computer chips once came
out every few years. Now, it’s nearly an annual
event. Accelerated technical progress makes it harder
for the statisticians to accurately measure GNP and
harder for GNP to serve as a proxy for living standards.

While GNP is measured in dollars and cents, many factors affect living standards. Trends
toward longer life spans, fewer accidents and decreasing air pollution suggest that U.S.
living standards have continued to improve in recent years. New data even show
progress in fighting crime.

Longevity
Years of age
80

70

60

50

40
1890

1910

1930

1950

1970

1990

Accidental Deaths
Rate per 100,000
80
70
60
50
40
30

’45 ’50 ’55 ’60 ’65 ’70 ’75 ’80 ’85 ’91

Air Pollution
Index
110

Some Other Rays of Light

90

More leisure and higher consumption aren’t the
only ways people’s lives have improved. Especially
as societies become richer, citizens tend to put
greater importance on nonmaterial factors that affect
living standards: better health, safety, more pleasant
working conditions, a cleaner environment. All of us
could add other considerations we value. “The good
life” becomes harder to measure when we move
beyond the dollars and cents accounting of GNP
data. Even so, there is evidence to counter fears that
U.S. living standards are getting worse.
Longevity may be the most important measure of
well-being in a modern society. The data show that
an average American’s life expectancy at birth has
increased each decade during the past century. As
might be expected, the biggest gains came in the first
half of the 20th century, but the upward trend continues. In the past decade, the life span rose by more
than one year and eight months.

70
50
30

’40

’50

’60

’70

’80

’85

’91

Crime
Rate per 100,000
6,000
5,000
4,000
3,000
2,000
1,000

’60 ’65 ’70 ’75 ’80 ’83 ’85 ’87 ’89 ’91 ’92

16

Many Americans use leisure time to pursue better health.

17

As technological innovations and economic progress
continue, today’s children can expect longer life spans
and higher living standards.

18

A Report On U.S. Living Standards

the bumper-to-bumper grind of an old-style commute. Imagine the possibilities: a lucky worker can
type a report into a laptop computer while sitting in
a beach chair in Maui, then send it to the office in
Dallas via cellular circuits. With improving battery
technology, there’s no need for even an extension cord.
Safety at work has gotten better, too. Accidental
deaths at work have declined consistently since at least
1945. Injuries on the job haven’t declined in recent
years, but they are well below the levels of previous
decades. If the hot, unsavory sweat shop symbolized
the workplace of a bygone era, today’s standard
might be the air-conditioned office and, at an increasing number of firms, employee cafeterias, daycare centers, break rooms and exercise facilities.
Some data show that wages fell over the past 20
years. Yet those statistical series ignore the rapid
growth of fringe benefits: with high tax rates, workers
often prefer to take their higher pay in the form of
additional health care, contributions to retirement
funds or employee assistance programs. Figures on
total compensation, which include extras employers
pay for, don’t show a decline. Some workers are
finding their benefits packages becoming leaner, but
many others are getting new perks. Overall, nonpay
compensation as a percentage of payroll is up a third
since 1970. Compared with a generation ago, more
employers are offering eye care, dental plans, paid
maternity leave and stock-purchase plans. Today’s
most progressive companies are starting to offer day
care and paternity leave. It’s impossible to prove
whether workplace abuses are declining. Even so,
workers today have greater redress for unfair dismissal, sexual harassment and other problems.
Americans are also making progress in improving the environment. Levels of such major pollutants
as particulate matter, sulfur oxides, volatile organic
compounds, carbon monoxide and lead were their
highest in 1970 or before. Levels of nitrogen oxides
peaked in 1980. Overall, air quality is better now
than at any time since data collection in 1940. Water
quality has improved since the 1960s, when authorities banned fishing in Lake Erie and fires erupted on
the polluted Cuyahoga River near Cleveland. The
U.S. Geological Survey, examining trends since 1980,
found that fecal coliform bacteria and phosphorous
have decreased substantially in many parts of the
country. Other traditional indicators of water quality—
dissolved oxygen, dissolved solids, nitrate and suspended sediments—have shown little change.
Despite such gains, we live in a complex world,
and it would be surprising if by every measure the
country’s life were getting better. The general gains

What’s more, the population generally sees itself
as healthier. Surveys by the U.S. Department of
Health and Human Services show a steady drop in
the proportion of Americans who rate their health as
“fair or poor,” from 12.2 percent in 1975 to 9.3 percent in 1991. Infant mortality rates fell from 20 deaths
per 1,000 live births in 1970 to less than nine in 1991.
The death rate from natural causes fell by 27 percent
from 1970 to 1990, with the most progress coming in
diseases of the heart. Cancer death rates are up
slightly, but modern medical science provides treatments that prolong life. The portion of the adult
population with high cholesterol fell sharply over the
past two decades. What once was fatal can in many
cases now be treated. Heart, liver and lung transplants, almost unheard of in the early 1970s, are
common today.
The country isn’t just healthier; it’s also safer in
some respects. Accidental deaths have declined in
every category, especially since 1970. Homes are
safer. The workplace is safer. In 1991, 88,000 Americans died in accidents, the lowest figure since 1924.
Highway deaths totaled 43,500 in 1991, the lowest
they’ve been since 1962. Even more encouraging, the
death rate per 100 million miles traveled on the
nation’s roads fell from three in 1975 to 1.8 in 1990.
At the higher rate, an additional 25,000 people would
have died in 1990. The incidence of death from
crashes of scheduled airliners has decreased to just a
fraction of what it was 20 years ago.
When it comes to time at work, improvement in
the quality of life continues, at least for most Americans. The trend toward service employment has rescued many Americans from the daily grind of the
manufacturing assembly line. And in manufacturing,
modern robots assist worker effort, meaning less
wear and tear on the human body. Observers also
find greater workplace flexibility in the form of
breaks, exercising and socializing. Properly understood, this time isn’t shirking. It goes for rest, birthday parties, fitness classes and awards ceremonies
that employers support as tools to improve morale
and efficiency.
What’s more, trends point toward greater flexibility of scheduling to reduce stress involved in
meeting family responsibilities. The number of
people with flexible job hours rose from 9.1 million
in 1985 to 12.1 million in 1991. New technologies—
modems, E-mail, fax machines, digital networks—
create opportunities for unheard of freedom from the
confines of yesterday’s 8-to-5 straitjacket. The ranks
of white-collar telecommuters, for example, swelled
to 6.6 million in 1992, saving at least some employees

19

These Are The Good Old Days

progress was hardly questioned.
Why, then, do so many people seem to feel the
country has lost its momentum? The question defies
an easy answer. Part of the reason may be that many
people aren’t aware of the quiet improvement in so
many areas of their lives—from more leisure to bigger
houses and better health. They are, on the other
hand, tuned into ills around them on a daily basis —
AIDs, global warming and crime, to cite just three
examples. And rightly so: these are problems that
need attention.
Furthermore, there’s a normal human tendency
to romanticize the past. Looking back at the highgrowth years from 1960 to 1973, for example, the
nostalgic may gloss over many unsettling events. The
country wrestled with the real possibility of nuclear
annihilation, an unpopular war in Vietnam, racial strife
that erupted in rioting, assassinations, political scandal and high rates of poverty. Many later problems—
inflation in the 1970s, toxic waste dumps that needed
cleaning up in the 1980s—trace their origins back
to those “good old days.”
History books can tell us about how Americans
once lived. For the grandparents or great-grandparents
of today’s workers, life really was a struggle. Hours
of work stretched from dawn to well after dusk.
Workplaces were often dimly lit, dirty and dangerous.
Houses were hot in the summer, cold in the winter.
At home, the daily chores were unending and backbreaking. Death came early. The social critics of the
time attributed much of the harshness of everyday
life to the failings of capitalism.
Looking backward over a century or more, though,
it’s obvious that the free enterprise system works—
and works well, so long as private profit incentives
are unfettered by government taxes, regulation, debt,
policy instability or other burdens. Herein lies the
secret to growth. If we let the system work, then
every successive generation ought to be able to claim
that “these are the good old days.” Few Americans
would fail to recognize that living standards have
improved by leaps and bounds over the long sweep
of time. Our Rip Van Winkle, his eyes not blinded by
nostalgia or negativism, sees quite clearly that it’s still
true today. His fresh perspective affirms the promise
of even higher living standards in the future—as long
as we allow the free enterprise system to work. ¢

in health are clouded by the AIDS epidemic. Air and
water may be getting cleaner, but they still aren’t
pristine. Environmentalists warn of global warming,
deforestation, hazardous waste dumping and endangered species. Working conditions may have become
more pleasant for most Americans, but some workers
displaced by downsizing may have new jobs that
aren’t as good as the ones they lost, or they may
have no job at all. Even among the 120 million employed in the United States, reports of widespread
layoffs cause anxiety about job security.
We are even more anxious about the increasing
incidence of crime and violence. In polls taken in
early 1994, crime ranked first among Americans’
worries. The data indicate why. Crime worsened in
the 1970s and remains high. But even here there’s
some encouraging news. Figures for the first half of
1993 show that crime rates are ebbing—by 3 percent
in violent offenses. Clearly, Americans’ well-being
will improve if the country can sustain a trend
toward less crime.
Diseases, pollution, unemployment and crime
are but a few of the threats to our living standards,
but we should not let them overshadow two decades
of progress.

A Last Look at Standards of Living
Rising living standards may be the ultimate test
of an economic system. The very notion of economic
progress depends in large measure on the potential
for most people to become increasingly better off.
Successful economies make their citizens richer and
happier. Failing ones leave them poorer.
Americans may question whether we’re becoming better off. By historical standards, the past two
decades’ 2.5-percent growth in GNP just doesn’t
measure up. But GNP does not tell the whole story.
A more careful look at leisure, home production,
new products, quality improvements and noneconomic indicators casts doubt on claims that the U.S.
economy’s rate of progress peaked a generation ago.
If nothing else, this broader view proves the concept
of standard of living cannot be captured by one or
two numbers. By broadening our view, we find evidence that Americans are still building a better life.
When all’s said and done, the gains in recent years
probably aren’t too different from what they were a
generation ago, when capitalism’s capacity for

20

Americans today can look forward to retirement years, something that was
almost unheard of in our great-grandparents’ era.

21

Catching Up

I

N THE PAST TWO DECADES, Americans
worried not only about the country’s ability to keep
pace with its own past performance but also about a
failure to grow as fast as many other countries.
The numbers are fairly familiar. From 1973 to
1990, per capita GNP in the United States grew by
an average 1.5 percent a year. By contrast, average
annual economic gains were 3.1 percent for Japan
and 2 percent for Germany. While the United States
seemed to crawl forward, such developing countries
as Korea, Taiwan, Thailand and, most recently, China
managed to get their economies moving briskly.
About GNP growth, Americans often ask, why are
other nations doing so much better?
The answer lies in a notion called convergence.
Envision an explorer wielding a machete to cut a path
through a dense jungle. He goes slowly, hacking his
way forward, destination not really known. Those who
come behind him have a much easier time of it. They
see the path. They know where they’re going. They
can move faster, gaining ground on the trailblazer.
That’s just about what happens with economies.
Using the sharp saber of free enterprise, the most
advanced nations open the pathway for others by
developing markets, technology, business systems
and infrastructure—in effect, creating a successful
model. Less developed countries can quickly adopt
what works and exploit existing markets, and it
shows up in faster rates of growth. In short, catching

up takes less effort. Some nations don’t emulate successful examples. Those that do tend to converge
with the leaders in economic performance.
Without question, other nations are catching up
to the United States. Per capita output in Japan rose
from 50 percent of the U.S. average in 1970 to 72
percent in 1992. Germany moved up from 63 percent
to 70 percent. Even so, the United States still hasn’t
lost its lead—and it’s not likely to do so.
As other countries move closer to the U.S. level
of development, their growth rates slow and converge
toward the U.S. performance. Take Japan, for example.
Its average annual growth rate outdid that of the United
States by 6.9 percentage points in the 1960s, by 2.3
percentage points in the 1970s and by 1.7 percentage
points in the 1980s. At the end of the latest decade,
some predicted Japan would overtake the United
States as the world’s biggest economy. In the 1990s,
however, both countries are likely to grow at about
the same rate. Unless Japan experiences a renewed
spurt of growth, it will not catch the United States.
To some Americans, faster growth abroad is a
threat. Nothing could be further from the truth. The
United States doesn’t benefit when other countries
stumble economically. Quite to the contrary, strong
growth abroad provides opportunities for U.S. exports
and business deals. All countries will move faster if
they travel together. ¢

A High Standard
For decades, the United States was the unchallenged leader in per capita GNP growth. Since the
1950s, GNP in other countries has risen faster than, but failed to match, the U.S. level.
Real GNP per capita

32,000

16,000

8,000

United States
Australia
United Kingdom
Sweden
France
Germany
Japan

4,000

2,000

1,000
’50

’55

’60

’65

’70

22

’75

’80

’85

’90

Secrets of Growth

E

A

’

VEN IF MERICANS living standards
aren’t slipping, the U.S. economy can do better. Boosting the rate of GNP growth would make Americans
even better off and help solve some of the country’s
problems —unemployment, poverty and budget deficits, to name just a few.
The U.S. economy has expanded by an average
of 2.5 percent a year since 1973. Present and future
generations of Americans would end up with much
higher living standards if the economy could jump
back to the 3.5-percent standard set in the century
before 1973. The mathematics of it are straightforward but the results eye-opening: at the end of an
average lifetime, the economy would be twice as
large with the addition of just one percentage point a
year to growth.
Inquiry into what makes economies grow dates
back at least as far as Adam Smith’s Wealth of Nations,

published in 1776. In the past decade, with growth
slowing in many parts of the world, the question has
experienced a revival of interest, becoming one of
economists’ hottest research topics. The latest thinking
recognizes that growth doesn’t just happen. Instead,
it arises out of the economic environment itself. The
key is a stable framework of rights, freedoms and
incentives that will spur individuals to work, businesses to produce and entrepreneurs to innovate.
In a free enterprise system, growth is a natural
and continuous process, but it must be nurtured by
the correct policies. The following are the basic secrets
of growth.
Establish and preserve property rights. Private
ownership of the means of production allows individuals to reap the rewards from economic activity,
thus encouraging efficient use of resources to satisfy
consumer wants. People produce more when working

Endogenous Growth:
Capitalism’s Perpetual Motion Machine
Insatiable consumer wants, combined with the pursuit of self-interest, provide an endless fuel for economic growth. This diagram illustrates how the process
works. Consumers will always want more than they have. The profit incentive, when allowed to operate, will continually power a quest for new ways to meet
the needs of consumers. Innovation leads to the introduction of new and better products, which enhances consumption. New firms emerge to produce these
products. In the process, they take business from old companies. The rising enterprises hire people for new and better jobs. Living standards rise. Even so,
consumers still aren’t satisfied and want more. ’Round and ’round it goes. The system slows if something—bad policies, for example — creates an impediment. The secrets of growth make it go faster.

Innovation
New and
Better
Products

Profit
Incentive

More
Consumption
Services

Insatiable
Wants

New and
Better Jobs
Higher
Standard
of Living

More
Leisure

23

New Firms
Emerge;
Old Firms Die

Secrets of Growth

in their own self-interest: altruism is a weak motive
when compared with the incentive for profit and
personal material gain.
Create market-friendly institutions. Markets
won’t function properly without an appropriate legal
code. Contracts need to be enforced. Property rights
need to be upheld. Monopoly needs to be controlled.
Institutions should facilitate economic activity and
complement innovation.
Maintain stable government policies. Households
and businesses can pursue their economic interests
only if government honors all promises—implicit
and explicit. Frequent changes in tax laws or other
government policies create uncertainty and instability
that can make a mockery of long-range planning.
Avoid protecting existing jobs, industries or businesses. The natural forces of creative destruction
continuously regenerate the economy, but protection
from failure prevents new, better or cheaper products
from replacing older ones. By rejecting a paternalistic
role for government, decision-making and responsibility stay in citizens’ hands, where they can be
best used to make the hard choices that new opportunities bring.
Keep taxes low and simple. People will work
harder and invest more when they can keep a larger
share of what they earn. Taxes that don’t discourage
work or investment—such as user fees or levies on
consumption— are less harmful to the economy.
Loopholes and special favors divert resources to less
efficient uses.
Abstain from excessive regulation. Licenses,
permits, fees and other burdens of operating businesses provide the same disincentives as taxes. Efforts
to deregulate and privatize will pay off by increasing
the rewards of going into business and hiring new
employees.

Invest in infrastructure. Government spending
on transportation facilities and other investment-type
projects can enhance the efficiency of the private
sector and facilitate commerce.
Maintain stable prices. Gyrations in the general
price level wreak havoc on decision-making by businesses, households and governments. Steady, sensible
control of the supply of money is the key to maintaining the currency’s purchasing power. Low inflation will facilitate the efficient exchange of goods
and services.
Nurture business credit, particularly for entrepreneurs. Keeping government debt low will conserve
credit for use by private business. It’s tempting to try
to legislate away credit risk with government guarantees, but such programs distort the allocation of investment funds and supplant the natural discipline of
failure in the marketplace.
Focus unemployment outlays on retraining. The
bulk of unemployment funds should be used to prepare displaced workers for new jobs and provide
incentives to work. Only a minimum payment should
go for passive unemployment.
Make education a priority. A better educated
work force is more productive, and it speeds the
introduction of new technology. Tax laws ought to
treat education as a depreciable capital good, equal
to, if not more important than, physical capital.
Allowing choice in schools will foster competition
and improve quality.
Promote free trade. Tariffs, quotas and other
trade barriers decrease competition and deny an
economy the full advantage of the production efficiencies offered throughout the world. Free trade
makes all nations wealthier. ¢

24

Acknowledgments

U.S. Department of Justice, Federal Bureau of Investigation,
Uniform Crime Reports for the United States, 1975, Table 1,
Index of Crime, United States, 1960–75; and Uniform
Crime Reports for the United States, 1993, Table 1, Index of
Crime, United States, 1973 –1992.

Acknowledgment
“These Are The Good Old Days: A Report on U.S. Living
Standards” was written by W. Michael Cox and Richard Alm.
The essay is based on research conducted by W. Michael Cox,
vice president and economic advisor, Federal Reserve Bank
of Dallas.

U.S. Department of Labor, Bureau of Labor Statistics, Bulletin
2434, Employment Cost Index and Levels, 1975 –93 (September 1993 and earlier years); Bulletin 2422, Employee
Benefits in Medium and Small Establishments, 1991 (May
1993); Bulletin 2370, Employment, Hours, and Earnings,
United States, 1909 –90, Volume I (March 1991); Employment and Earnings, monthly (Table A– 4: “Employment
Status of the Civilian Noninstitutional Population by Age,
Sex, and Race,” 1993 and earlier years); Monthly Labor
Review, “Trends in Retirement Age by Sex, 1950 – 2005”
( July 1992), “Time-off Benefits in Small Establishments”
(March 1992), “Variations in Holidays, Vacations, and Area
Pay Levels” (February 1989) and “Absence from Work—
Measuring the Hours Lost” (October 1977).

Selected Bibliography
Atack, Jeremy, and Fred Bateman, “How Long Was the
Average Workday in 1880?” Journal of Economic History,
March 1992.
Balke, Nathan, and Robert J. Gordon, “Prewar Gross National
Product,” Journal of Political Economy, February 1989.
Desmond, Kevin, A Timetable of Inventions and Discoveries
(New York: M. Evans and Co., 1986).
Eisner, Robert, The Total Incomes Systems of Accounts
(Chicago: University of Chicago Press, 1989).

Data Sources for Figures

Federal Reserve Bulletin, January 1992 and December 1984.

Page 4
The World Through Rip’s Eyes
Eisner, Federal Reserve Bulletin (1992 and 1984), National
Safety Council, Statistical Abstract of the United States, U.S.
Department of Commerce (Current Population Reports
and Survey of Current Business), U.S. Department of
Energy, U.S. Department of Health and Human Services,
U.S. Department of Justice, U.S. Department of Labor
(Bulletins 2434, 2422 and 2370; Employment and Earnings ; and Monthly Labor Review —March and July 1992
and 1977).

Gordon, Robert J., The Measurement of Durable Goods Prices
(Chicago: University of Chicago Press, 1990).
Greis, Theresa Diss, The Decline of Annual Hours Worked in
the United States Since 1947, Manpower and Human
Resources Studies, no. 10, The Wharton School (Philadelphia: University of Philadelphia, 1984).
Lund, Robert L., “Truth About the American Productive
System,” in collaboration with Earl Reeves in Truth About
the New Deal (New York: Longmans, Green and Co.,
1936).

Growth of U.S. Gross National Product, 1870 –1990
Balke and Gordon and U.S. Department of Commerce
(Current Population Reports, Historical Statistics of the
United States and Survey of Current Business).

Maddison, Angus, Dynamic Forces in Capitalist Development
(New York: Oxford University Press, 1991) and Economic
Growth in the West (New York: The Twentieth Century
Fund, 1964).

Page 7
Work Time
Atack and Bateman, Eisner, Greis, Maddison (1991 and 1964),
U.S. Department of Commerce (Survey of Current Business)
and U.S. Department of Labor (Bulletin 2370 and Monthly
Labor Review — March and July 1992, 1989, 1977).

National Safety Council, Accident Facts, 1992.
Statistical Abstract of the United States, various issues.
U.S. Department of Commerce, Bureau of the Census, Current
Population Reports, series P– 65; Computer Use in the
United States: 1989, series P–23, no. 171; and Historical
Statistics of the United States: Colonial Times to 1970.

Page 8
Less Work, More Leisure and Three Profiles of a Lifetime
U.S. Department of Commerce (Historical Statistics of the
United States), U.S. Department of Health and Human
Services (Vital Statistics of the United States); see also page
7 sources.

U.S. Department of Commerce, Bureau of Economic Analysis,
Survey of Current Business, January 1992.

Page 16
Quality of Life
U.S. Department of Commerce (Current Population Reports),
National Safety Council, Statistical Abstract of the United
States, U.S. Department of Justice.

U.S. Department of Energy, Office of Energy Markets and End
Use, U.S. Residential Energy Consumption Survey, Housing
Characteristics, annual, 1990 and various issues.
U.S. Department of Health and Human Services, Public Health
Services, National Center for Health Statistics, Vital Statistics of the United States, 1984 and annual; and Health
United States 1992 and Healthy People 2000 Review,
August 1993.

Page 22
A High Standard
Maddison (1991).

25

T H E
◆

◆

YEAR

-in-

REVIEW

IN 1993,
OF

DALLAS

THE

FEDERAL RESERVE BANK

BUILT UPON THE FOUNDATION LAID

BY ITS MOVE INTO STATE-OF-THE-ART FACILITIES
A YEAR EARLIER.

EFFORTS TO STREAMLINE OPERA-

TIONS AND INCORPORATE TECHNOLOGICAL
ADVANCES PAID SIGNIFICANT DIVIDENDS BY PROVIDING INCREASED EFFICIENCY AND EXPANDED

E LEVENTH
DISTRICT’S FINANCIAL INSTITUTIONS. MOREOVER,
FLEXIBILITY IN SERVICES TO THE

26

The Year in Review

continued moves toward consolidation in the Dallas

amount of time required to resolve adjustments, an

Fed’s operational areas were carefully balanced with

increase in productivity and a reduction in costs, all

the development of several programs to enhance

of which translated into savings that will be passed

quality and customer service. Overall, 1993 was a
year in which the Bank took advantage of a variety of

on to the Bank’s customers. Moreover, to meet the

innovative programs and ideas to meet the challenge

help customers operate as efficiently as possible, the

of providing cost-effective and reliable financial

Bank developed more than a dozen new paper-

services while promoting safe and sound banking

and electronic-check products. Advances were also

and economic growth throughout the District.

made in the Bank’s system for handling check adjustments, as tests were completed for an automated

Eleventh District Economic Overview

adjustments system that will be implemented in early

multiplying financial service needs in the District and

The Eleventh District experienced moderate

1994. The new system will improve the level of

economic growth in 1993, outperforming the national

service to financial institutions by increasing the

economy for the fourth consecutive year. Nonfarm

number of adjustments cases that can be researched

employment in Texas, Louisiana and New Mexico

and resolved on a same-day basis. In addition, in

rose 2.2 percent last year, compared with 1.8 percent

1993 the Bank laid the groundwork to test medium-

for the nation. Texas posted a gain of more than 2

speed check imaging. Successful completion of a

percent, while New Mexico showed the greatest

pilot project will enable the Dallas Fed to provide

strength with an employment increase of more than

state-of-the-art check imaging services throughout

4.5 percent. Louisiana’s increase was 1.2 percent.
The primary factors behind the Texas economy’s

the District beginning in mid-1994.

growth were strong construction activity, a stable

top priority was strengthening procedures to ensure

energy industry and exports to Mexico. Industries

quality and security and integrating a new currency

that trade with Mexico were among Texas’ strongest

vault materials handling process into the automated

in 1993 and should receive a boost in 1994 from a

cash management system. The Bank also advanced

stronger Mexican economy and the passage of the
North American Free Trade Agreement. Low interest

the Federal Reserve System’s efforts to improve the
quality of currency in circulation by hosting a series

rates, stable home values and favorable demographics

of cash operations seminars for financial institutions

continued to fuel growth in single-family home con-

throughout the District, and added an international

struction in the state, while high natural gas prices

dimension to the System’s effort to increase counter-

encouraged relatively strong drilling activity.

feit awareness by holding detection symposiums for

In currency and coin operations, the Dallas Fed’s

The principal sources of strength in New Mexico

management and staff at Banco de México.

were business relocation and expansion, a single-

Continuing the System’s consolidation of its

family housing boom and an increase in natural gas

computer operations, the Bank’s automated clearing-

production. Louisiana, meanwhile, continued to

house (ACH) and funds transfer functions were

combat losses in the energy industry, as falling oil

successfully shifted to Federal Reserve Automation

prices led to more movement out of the oil extraction business and worldwide demand for chemical

Services at the Dallas Fed and at the Federal Reserve

products remained weak.

dation sites. ACH and funds transfer customers

Bank of Richmond, two of the three System consoliexperienced no service disruptions during the transition, and the Bank was able to make progress in

Dallas Fed Financial Services
In 1993, the Dallas Fed focused its financial
services efforts on improving the quality of products

reducing electronic payments-related expenses.
The Dallas Fed’s securities area was also heavily

and services and implementing an aggressive cost

involved in consolidation activities that take advan-

containment program. In check collection, this

tage of advances in automation technology. The

resulted in fewer internal errors, a reduction in the

Bank’s book-entry securities processing function and

27

The Year in Review

its data processing support for Treasury tax and loan

holding companies under Dallas Fed supervision last

and savings bond applications were both transferred

year controlled 650 insured commercial banks that

to automation consolidation sites, and the District’s

hold approximately 34 percent of all insured com-

savings bond operations were merged with those of

mercial bank assets in the District. Foreign banks

the Federal Reserve Bank of Kansas City.

continue to play a significant role in the District’s
financial activities, with 36 foreign banks from 14
countries operating 21 state-licensed agencies and 23

Banking Supervision;
Discount and Credit

representative offices.

In 1993, low market interest rates, wide interest
spreads and changes in accounting rules helped the

Research and Public Affairs
Economic research and public affairs activities at

Eleventh District’s commercial banking industry post
another year of strong profits. The return on District

the Dallas Fed in 1993 focused on the promotion of

banking assets was 1.4 percent, exceeding the 1.2

a better understanding of free enterprise and its

percent return of 1992. Moreover, the number of

significance to the Southwest region’s economy,

bank failures, which dropped from 31 in 1992 to 10

particularly in the area of free trade. The year was

in 1993, was the lowest in eight years.

highlighted by efforts to research and provide information on the international aspects of free trade—

As the supervisor of state member banks and
bank holding companies in the District, the Dallas

from exchange rates, the role of financial institutions

Fed is responsible for conducting examinations for

in the international economy and intellectual property

safety and soundness and for compliance with

rights to developing-country debt and the Mexican

consumer protection laws as well as the Community

financial system. Moreover, the Center for Latin

Reinvestment Act. Reflecting the stable health of the

American Economics was established at the Bank to

District’s banking industry, the Bank conducted

foster further research in this area. The Bank also

nearly the same number of examinations last year as

studied the financial industry, looking into such

the year before—432 examinations in 1993 com-

issues as the “missing money” in the M2 figures,

pared with 430 exams in 1992. Of the 432 examinations, 41 were reviews for compliance with consumer

recession and recovery cycles, and the credit crunch.
Numerous publications were produced for a

and civil rights legislation.

variety of Eleventh District audiences in support of
the Bank’s research and economic education efforts.

Consolidation activity in the Eleventh District in
1993 increased slightly from a year earlier. The Dallas

In addition to regular issues of Economic Review, The

Fed processed 229 applications for mergers and

Southwest Economy, Financial Industry Studies,

acquisitions, changes in control and management,

Financial Industry Issues and Houston Business,

and other actions requiring regulatory approval, up

special editions of The Southwest Economy focusing

from 207 such applications in 1992.

on NAFTA and on the missing M2 were generated, as
were two economic study guides for teachers and

Because of a substantial decrease in seasonal
lending to meet the temporary liquidity needs of

student-oriented brochures on labor and international

financial institutions in the District, the number of

trade. The Bank sponsored a pair of conferences in

loans extended by the Dallas Fed’s discount window

1993—one on imperatives for banking in the 1990s,

dropped from 521 in 1992 to 210 in 1993, with total

the other on North American free trade—and held

credit extended decreasing from $1.3 billion in 1992

nearly two dozen workshops across the District to

to $380 million in 1993.

educate teachers on such topics as free enterprise and

The 52 state-chartered banks under the Dallas
Fed’s supervision in 1993 represented about 4

free trade. As part of its continuing efforts to encourage community development in the region, the Bank

percent of all insured commercial banks in the

also hosted a community investment lending confer-

District and held more than 2 percent of all insured

ence and conducted several workshops on commu-

commercial bank assets. The more than 530 bank

nity reinvestment policy issues and requirements.

28

The Year in Review

One of the final public affairs activities of the year—
an effort that should, well into the future, educate the
public about the central bank’s role in maintaining a
stable economy—was the completion of Bank tour
exhibits. Designed and constructed over a period of
two years, the exhibits will serve as the focal point
of public tours that will begin at the Bank in 1994.
In retrospect, the Dallas Fed’s activities in 1993
reflect a heightened effort to meet the multiplying
needs of its constituents. Even as the banking
industry continues to undergo major change, the
Dallas Fed’s objectives remain consistent—to provide
the highest quality, most cost-efficient financial
services available, while serving as a vital conduit
for sound banking and economic growth throughout
the Eleventh District. ¢

29

Boards of Directors

Federal Reserve Bank of Dallas
Chairman:
Leo E. Linbeck, Jr.
Chairman of the Board and Chief Executive Officer
Linbeck Construction Corp.
Houston, Texas
Deputy Chairman:
Cece Smith
General Partner
Phillips–Smith Specialty Retail Group
Dallas, Texas
Jeff Austin, Jr.
Chairman of the Board
Texas National Bank
Longview, Texas
Milton Carroll
Chairman of the Board and Chief Executive Officer
Instrument Products, Inc.
Houston, Texas
J. B. Cooper, Jr.
Farmer
Roscoe, Texas
T. C. Frost
Chairman of the Board
Frost National Bank
San Antonio, Texas

Chairman Pro Tem:
Alvin T. Johnson
President
Management Assistance Corp. of America
El Paso, Texas
Hugo Bustamante, Jr.
Owner and Chief Executive Officer
ProntoLube, dba ProntoLube
El Paso, Texas
Veronica K. Callaghan
Vice President and Principal
KASCO Ventures, Inc.
El Paso, Texas
Ben H. Haines, Jr.
President and Chief Operating Officer
First National Bank of Dona Ana County
Las Cruces, New Mexico
Wayne Merritt
Chairman of the Board and President
Texas National Bank of Midland
Midland, Texas
Diana S. Natalicio
President
The University of Texas at El Paso
El Paso, Texas

Houston Branch
James A. Martin
Third General Vice President
International Association of Bridge, Structural
and Ornamental Iron Workers
Austin, Texas
Eugene M. Phillips
Chairman of the Board and President
The First National Bank of Panhandle
Panhandle, Texas
Peyton Yates
President
Yates Drilling Co.
Artesia, New Mexico

Chairman:
Judy Ley Allen
Partner and Administrator
Allen Investments
Houston, Texas

Federal Advisory Council Member
Charles R. Hrdlicka
Chairman and Chief Executive Officer
Victoria Bank and Trust
Victoria, Texas

Walter E. Johnson
President and Chief Executive Officer
Southwest Bank of Texas
Houston, Texas

Chairman:
W. Thomas Beard, III
President
Leoncita Cattle Co.
Alpine, Texas

J. Michael Solar
Principal Attorney
Solar & Ellis L.L.P.
Houston, Texas

San Antonio Branch
Chairman:
Erich Wendl
President and Chief Executive Officer
Maverick Markets, Inc.
Corpus Christi, Texas
Chairman Pro Tem:
Carol L. Thompson
Vice President
ComputerLand Texas
Austin, Texas
Gregory W. Crane
Chairman of the Board, President and
Chief Executive Officer
Broadway National Bank
San Antonio, Texas
Javier Garza
Executive Vice President
The Laredo National Bank
Laredo, Texas
Roger R. Hemminghaus
Chairman of the Board, President and
Chief Executive Officer
Diamond Shamrock, Inc.
San Antonio, Texas

Chairman Pro Tem:
I. H. Kempner, III
Chairman of the Board
Imperial Holly Corp.
Sugar Land, Texas
T. H. Dippel, Jr.
Chairman of the Board and President
Brenham Bancshares, Inc.
Brenham, Texas

El Paso Branch

Clive Runnells
President and Director
Mid-Coast Cable Television, Inc.
El Campo, Texas
President and Director
Runnells Cattle Co.
Bay City, Texas

Robert C. McNair
Chief Executive Officer
Cogen Technologies, Inc.
Houston, Texas

30

Jack Moore
Owner/Manager
T. J. Moore Lumber, Inc.
Ingram, Texas
Sam R. Sparks
President
Sam R. Sparks, Inc.
Progreso, Texas

Effective December 31, 1993

Advisory Councils

Financial Institutions

Small Business and Agriculture

James A. Altick
President and Chief Executive Officer
Central Bank
Monroe, Louisiana

Joe Alcantar
President
Alman Electric, Inc.
Mesquite, Texas

Jack Antonini
President and Chief Executive Officer
USAA Federal Savings Bank
San Antonio, Texas

Patrick E. Boyt
Managing Partner
P. E. Boyt Farms
Devers, Texas

John H. Arnold
President and Chief Executive Officer
Southwest Corporate Federal Credit Union
Dallas, Texas

Ron Davenport
Owner
Davenport Cattle Co.
Friona, Texas

Jack A. Collins
President and Chief Executive Officer
The Bank of the West
Austin, Texas

Robert D. Dooley
Partner
KPMG, Peat Marwick
Dallas, Texas

P. M. Elvir
Managing Director
Operations and Cash Management
Bank One, Texas, N.A.
Dallas, Texas

T. Mike Field
Agriculture and Real Estate
Lubbock, Texas

Robert G. Greer
Chairman
Tanglewood Bank, N.A.
Houston, Texas
Ron Humphreys
Senior Vice President
Marketing and Operations
First Savings Bank FSB
Clovis, New Mexico
Don Powell
Chairman, President and Chief Executive Officer
The First National Bank of Amarillo
Amarillo, Texas

Annette Bailey Hamilton
Chairman of the Board
Annette 2 Cosmetiques, Inc.
Dallas, Texas
J. Jay O’Brien
Cattleman
Amarillo, Texas
Lois Farfel Stark
President
Stark Productions, Inc.
Houston, Texas
Charles R. Tharp
Partner/Manager
Tharp Farms
Las Cruces, New Mexico

Jimmy Seay
President and Chief Executive Officer
The City National Bank
Mineral Wells, Texas

L. C. Unfred
Farmer
New Home, Texas

Sandra M. Smith
President and Chief Executive Officer
Texas Federal Credit Union
Dallas, Texas

Jeffrey W. Wilson
President
Cattle Baron Restaurant, Inc.
Roswell, New Mexico

Hayden D. Watson
Executive Vice President
First Interstate Bank of Texas, N.A.
Houston, Texas

Effective December 31, 1993

31

Statement of Condition

December 31, 1993
(Thousands)

December 31, 1992
(Thousands)

ASSETS
Gold certificate account 1
Special drawing rights certificate account 2
Coin
Loans to depository institutions
Securities:
Federal agency obligations
U.S. government securities
Total securities
Items in process of collection
Bank premises (net)
Other assets
Interdistrict settlement account
TOTAL ASSETS

$

510,000
377,000
41,648
0

$

463,000
377,000
27,426
0

198,648
14,219,076
$ 14,417,724
511,231
158,195
1,930,269
(2,830,800)
$ 15,115,267

198,566
10,822,673
$ 11,021,239
418,164
161,185
1,998,586
2,314,128
$ 16,780,728

$ 12,096,542

$ 14,082,302

2,020,501
9,646
3,767
$ 2,033,914
380,451
112,290
$ 14,623,197

1,808,300
11,092
26,894
$
1,846,286
355,660
72,594
$ 16,356,842

$

$

LIABILITIES
Federal Reserve notes
Deposits:
Depository institutions
Foreign
Other
Total deposits
Deferred credit items
Other liabilities
TOTAL LIABILITIES
CAPITAL ACCOUNTS
Capital paid in
Surplus
TOTAL CAPITAL ACCOUNTS
TOTAL LIABILITIES AND CAPITAL ACCOUNTS

246,035
246,035
$
492,070
$ 15,115,267

1

This Bank’s share of gold certificates deposited by the U.S. Treasury with the Federal Reserve System.

2

This Bank’s share of special drawing rights certificates deposited by the U.S. Treasury with the Federal Reserve Bank of New York.

32

211,943
211,943
$
423,886
$ 16,780,728

Statement of Operations

1993
(Thousands)
CURRENT INCOME
Interest on loans
Interest on government securities
Income on foreign currency
Income from priced services
Other income
Total current income

$

$

CURRENT EXPENSES
Current operating expenses
Less expenses reimbursed
Current net operating expenses
Cost of earnings credits
Current net expenses
CURRENT NET INCOME

$
$
$
$

PROFIT AND LOSS
Additions to current net income:
Profit on sales of government securities (net)
Profit on foreign exchange transactions (net)
Other additions
Total additions
Deductions from current net income:
Loss on sales of government securities (net)
Loss on foreign exchange transactions (net)
Other deductions
Total deductions
Net additions (deductions)

$

$
$

Cost of unreimbursable Treasury services
Assessment by Board of Governors:
Expenditures
Federal Reserve currency costs
NET INCOME AVAILABLE FOR DISTRIBUTION

97
687,482
87,713
54,171
236
829,699

$

115,241
9,317
105,924
7,932
113,856
715,843

$

1,583
18,426
10
20,019

$

$
$
$

$

$
$

181
645,883
168,875
53,345
290
868,574

107,879
8,863
99,016
11,217
110,233
758,341

4,565
0
4
4,569

$
$

0
0
29,448
29,448
(9,429)

$
$

0
86,081
36
86,117
(81,548)

$

2,371

$

2,318

$

9,932
16,564
677,547

$

10,274
14,354
649,847

$

33

For the year ended December 31
1992
(Thousands)

$

Statement of Surplus

1993
(Thousands)
Surplus, January 1
Net income available for distribution
LESS:
Dividends paid
Payments to the U.S. Treasury
Net amount transferred to (from) surplus
Surplus, December 31

$

$
$

34

211,943
677,547
14,334
629,121
34,092
246,035

For the year ended December 31
1992
(Thousands)
$

$
$

211,440
649,847
13,077
636,267
503
211,943

Volume of Operations

District Summary

Number of Pieces Handled
1993
1992

Currency received and counted
Coin received and counted
Food stamps redeemed

Transfers of funds

CHECKS HANDLED
Commercial—processed*
Commercial—fine sorted
U.S. government checks

ACH ITEMS HANDLED
Commercial
U.S. government
COLLECTION ITEMS HANDLED
U.S. government coupons paid
Municipal coupons and bonds
ISSUES, REDEMPTIONS,
EXCHANGES OF U.S.
GOVERNMENT SECURITIES
Definitive and book-entry
LOANS
Advances made

Dollar Amount (Thousands)
1993
1992

1,137,737,587
1,333,702,015
464,601,664

984,670,412
724,822,479
436,547,796

17,207,161
196,731
2,396,819

15,556,204
127,515
2,241,908

6,434,362

6,199,053

10,636,232,838

8,082,428,378

1,146,543,615
503,800,889
29,740,142

1,105,328,973
476,632,826
29,769,663

671,186,816
139,944,287
31,608,562

607,988,036
124,205,173
36,933,809

151,236,263
50,652,442

128,009,669
46,265,782

576,708,956
60,724,041

509,256,382
54,355,908

8,841
8,305

11,519
132,126

8,577
545,965

9,867
292,312

2,954,922

3,403,064

2,877,908,104

1,876,923,996

210

521

388,882

1,295,073

*Exclusive of checks drawn on Federal Reserve Banks.

35

Officers

Federal Reserve Bank of Dallas

Genie D. Short
Vice President

John V. Duca
Research Officer

Larry M. Snell
Vice President

William C. Gruben
Research Officer

W. Arthur Tribble
Vice President

Evan F. Koenig
Research Officer

Gloria V. Brown
Assistant Vice President and
Community Affairs Officer

Sharon A. Sweeney
Associate Counsel and
Associate Secretary

Stephen P. A. Brown
Assistant Vice President and
Senior Economist

Evelyn LV. Watkins
Accounting Officer

Terry B. Campbell
Assistant Vice President

El Paso

Dallas
Robert D. McTeer, Jr.
President and
Chief Executive Officer
Tony J. Salvaggio
First Vice President and
Chief Operating Officer
Robert D. Hankins
Senior Vice President
Larry J. Reck
Senior Vice President
Harvey Rosenblum
Senior Vice President and
Director of Research
James L. Stull
Senior Vice President

Robert G. Feil
Assistant Vice President
Johnny L. Johnson
Assistant Vice President

Millard E. Sweatt
Senior Vice President,
General Counsel and Secretary

Joanna O. Kolson
Assistant Vice President

Earl Anderson
Vice President

C. LaVor Lym
Assistant Vice President

Basil J. Asaro
Vice President

James R. McCullin
Assistant Vice President

Lyne H. Carter
Vice President

Dean A. Pankonien
Assistant Vice President

Jack A. Clymer
Vice President

John R. Phillips
Assistant Vice President

W. Michael Cox
Vice President and
Economic Advisor

Larry C. Ripley
Assistant Vice President

Billy J. Dusek
Vice President
J. Tyrone Gholson
Vice President
Jerry L. Hedrick
Vice President
Helen E. Holcomb
Vice President
Joel L. Koonce, Jr.
Vice President
Robert F. Langlinais
Vice President and
General Auditor
Rebecca W. Meinzer
Vice President
Gerald P. O’Driscoll, Jr.
Vice President and
Economic Advisor

Mary M. Rosas
Assistant Vice President
Gayle Teague
Assistant Vice President
Michael N. Turner
Assistant Vice President
Stephen M. Welch
Assistant Vice President
Marion E. White
Assistant Vice President
Robert L. Whitman
Assistant Vice President
Bob W. Williams
Assistant Vice President
Emilie S. Worthy
Assistant Vice President
Meredith N. Black
Supervisory Information Officer

36

Sam C. Clay
Vice President in Charge
J. Eloise Guinn
Assistant Vice President
Javier R. Jimenez
Assistant Vice President

Houston
Robert Smith, III
Senior Vice President in Charge
Vernon L. Bartee
Vice President
Richard J. Burda
Assistant Vice President
René G. Gonzales
Assistant Vice President
Luther E. Richards
Assistant Vice President
Robert W. Gilmer
Research Officer
Kenneth V. McKee
Audit Officer

San Antonio
Thomas H. Robertson
Vice President in Charge
Taylor H. Barbee
Assistant Vice President
Richard A. Gutierrez
Assistant Vice President
D. Karen Salisbury
Operations Officer

Effective January 1, 1994

The Federal Reserve Bank of Dallas
is one of 12 regional Federal Reserve
Banks in the United States. Together
with the Board of Governors in
Washington, D.C., these organizations
form the Federal Reserve System and
function as the nation’s central bank.
The System’s basic purpose is to provide
a flow of money and credit that will
foster orderly economic growth and
a stable dollar. In addition, Federal
Reserve Banks supervise banks and bank
holding companies and provide certain

F EATURE P HOTOGRAPHY

BY

S KEETER H AGLER.

financial services to the banking
industry, the federal government and
the public.
Since 1914, the Federal Reserve Bank
of Dallas has served the financial
institutions in the Eleventh District. The
Eleventh District encompasses 350,000

DESIGNED

AND

PRINTED

BY THE

FEDERAL RESERVE B ANK

OF

D ALLAS G RAPHIC ARTS D EPARTMENT .

square miles and comprises the state of
Texas, northern Louisiana and southern
New Mexico. The three branch offices of
the Federal Reserve Bank of Dallas are
in El Paso, Houston and San Antonio.

FEDERAL RESERVE BANK OF DALLAS
2200 NORTH PEARL STREET
DALLAS, TEXAS 75201
(214) 922-6000
EL PASO BRANCH
301 EAST MAIN STREET
EL PASO, TEXAS 79901
(915) 544-4730
HOUSTON BRANCH
1701 SAN JACINTO STREET
HOUSTON, TEXAS 77002
(713) 659-4433
SAN ANTONIO BRANCH
126 EAST NUEVA STREET
SAN ANTONIO, TEXAS 78204
(210) 978-1200