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MONTHLY BUSINESS REVIEW of the Volume 31 FEDERAL RESERVE BANK of Dallas, Texas, August 1, 1946 Dallas Number 8 THE HOUSING PROBLEMCONSIDERATION OF SOME OF ITS ASPECTS R. B. JOHNSON In the Eleventh Federal Reserve District and the nation, an acute shortage of living accommodations and a rapid increase in building costs have contributed to substantial divergencies between the original cost of houses and their current replacement cost and the prices at which they are being offered in the market. Surveys conducted by the National Housing Agency during March 1946 revealed a significant degree of inflation in the prices of residences and residential sites throughout the nation. Houses valued at less than $6,000 in the spring of 1940 had risen an average of 65 per cent in price by February 1946, while the prices of "raw land" and lots had increased approximately 60 per cent. Increases reported for the Southwest were greater than for any other area except the Pacific Coast. In the Southwest, prices of houses valued under $6,000 in 1940 had risen 77 per cent by February 1946, and "raw land" usable for residence sites had increased 93 per cent. Since February, increases in urban site values and in the prices of existing dwellings have continued in the areas in the Southwest from which current information is available. The increase which has occurred since the beginning of the war in the average cost of constructing a dwelling unit cannot be determined precisely fro,m available data. As shown in Table II, indexes of wholesale prices of building materials other than lumber, union wage rates in the building trades, and the estimated cost of constructing a "standard house" have increased considerably less than 50 per cent since 1940. These indexes, however, do not perhaps TABLE I. AVERAGE PERCENTAGE INCREASES adequately reflect the effect upon the cost of conIN PRICES OF HOMES AND HOMESITES struction of such intangible influences as variations Homesites - Homes Valued in the efficiency of labor, delays in construction, and Under $6,000 to Raw $6,000 $12,000 Land Lots the use of substitute materials. Moreover, rising Spring 1940 to February 1946 contractors' margins have contributed further to 65.1 57.0 60.1 61.8 S.-All cities .. ... the increase in cost to the buyer. Giving consider- U. Cities 66.0 61. 7 68.7 64.0 100,000 and over. 64.9 55.9 57.9 61.3 Cities under 100,000 ... ation to the effect of these intangible factors, repSouth Central' utable building contractors report that the cost of West 57.6 93.3 62.2 All cities. . . .. ... . .. 76.7 building residences probably has risen somewhere 91.4 67.9 75 .6 108.0 Cities 100,000 and over. 55 .7 59.9 74 .1 90.6 Cities under 100,000 .... between 85 per cent and 100 per cent since the September 1945 to February 1946 beginning of the war. Their estimates conform ap14 .8 23.0 23 .3 U. S. - All cities ......... . 17.7 proximately to the increase in the cost per square 15.8 27.6 26.6 Cities 100 000 and over . . 17 .3 17 .8 14.6 21.8 22.4 Cities uilder 100,000 .... . foot of residential construction computed from Soutb Central data compiled by the F. W. Dodge Corporation. West 23.7 All cities....... .... .... 18.1 15 .1 37.8 28 .0 Cities 100000 andover .. 19 .0 15.. 4 40.1 These data, summarized in Table III, show that the 22.9 Cities under 100,000..... 18.0 15.1 37.3 average valuation of dwelling units constructed in SOURCE: National Housing Agency. ~ Texas rose from approximately $3,900 in 1940 to 'Includes Arkansas, Louisiana, Oklahoma and Texas. • $6,580 in the second quarter: of 1946, although the average unit size of dwellings declined from 1,270 square feet to 1,149 square feet. The reported cost per square foot of residential construction in Texas averaged $3.04 in 1940 and $5.73 in the second quarter of 1946. This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) 98 MONTHLY BUSINESS REVIEW The housing situation in Texas raises several questions of great interest to contractors, owners, prospective purchasers, and lenders. What will be the probable duration of the rise in residential values and building costs? Around what levels will the prices of houses and the cost of new construction eyentuaUy fluctuate? How rapidly can the conTABLE II . VARIATIONS IN INDEXES OF struction industry meet the demand for new dwellCONSTRUCTION COST ings? What will be the magnitude of the long-run Index P eriod P ercentage demand for housing? Although obviously it is imPrices of wholesale building . answers to th ' .Tuly 1940·April l946 mcrease possible to give d efi rute ese questIOns, materials All building materials .... . 37 it is profitable to analyze the factors which are inBn cks and tile . . . ...... . 33 fluencing housing demand, dwelling values, and Cement . . . 13 . ... . . Lu mber ....... 81 construc tion volume and costs. In this article some Paint and paint materials .. . 28 of the dominant influences upon the housing marPlumbing and heating ... . 25 Aver~e union wage rates in ket and the residential construction industry in building trades....... . .. . . .J une 1940·.July 1945 14 Texas and the Eleventh District are considered. Index of cost of building standard house Feb. 194O-May 1946 The Deficiency in Housing Houston, T exa". 34 Residential construction lagged behind the popuUnited States. . . . . . . . . . . . . . . 40 SOURCE : U. S. Depart ment of Labor and Federal H ome Loan lation increase and the industrial and trade expanBank. sion which occurred throughout the 1930's, despite TABLE III. COST CHARACTERISTICS OF NEW the efforts of the national government to stimulate DWELLING UNITS IN TEXAS the construction and ownership of homes. Between Average valuation Square Cost per 1930 and 1940, 492,000 ' dwelling units were conof dwelling units footage square Period const ructed per unit foot structed in Texas, as compared with an increase of 1937 . . . ... . ... $4,185 1,468 $2 .85 318 ,000 in the number of families in the State. 1938 .. . ..... 4,341 1,357 3 .20 Although that volume of construction apparently ~~: : : ::: :::: :: : :: ~:!: ~:~~~ ~ : ~! created a surplus of 174,000 new housing units, 1941. .. ..... 3,777 1,133 3 .33 those additional units did not much more than com1942 .. . .. . . . . . ... . . 2,793 813 3 .44 pensate for the disappearance of dwelling units 1943.. .. . . .. ... . ... 2,051 587 3 .50 which occurred during the decade as a result of 1944 . . ........ . .... 2,926 876 3 .34 depreciation and destruction. Consequently, little 1945 . . .. . . . . .. .. . .. 5,319 1,282 4. 15 d d l' .h 1st quarter, 1946 .... 6,684 1,349 4 .96 progress was rna e towar rep acmg Wlt new 2d quarter, 1946. ... 6,580 1,149 5 .73 dwelling units the many housing structures which SOURCE : Computed from F. W. Dodge Corporation data. provided substandard living conditions. At the beginning of 1940, the supply of shelter in Texas probably was great enough to hous.e all the families in the State, but a large number of the dwellings provided inadequate facilities or were in serious disrepair. In urban areas three out of every eight dwelling units needed major installations or repair, while in rural areas the percentage of substandard residential units was much greater. The unsatisfactory character of the shelter in which a large percentage of the families in the State lived tended to establish a potential demand for new housing. That potential demand began to crystallize as effective demand when individual incomes rose late in 1940 and throughout 1941. Partly as a consequence of this development, residential construction increased greatly in Texas during 1941 and the first six months of 1942, but thereafter was curtailed as a result of government regulations which restricted residential construction to low-cost dwelling units f or war-plant employees and military personnel. Between 1940 and 1946, 200,000 permanent dwelling units' and 25 ,000 temporary dwelling units' were built. That construction, however, actually did not meet the demand for new housing in the State created by immigration, shifts of population f rom rural to urban areas, and a substantial increase in m arriages. When the war ended, an absolute deficiency of shelter existed in the urban areas of the State. It was anticipated before the end of the w ar that when w ar contracts were terminated migration of war-plant workers from urban to rural areas would alleviate the housing shortage, but that expected shift in population did not develop on a large scale. Expansion of employment in service and trade offset to a considerable extent the moderate decline in industrial employment which occurred, and as 'Data from the 1940 Census of Housing. "Dwelling units" as defined by the Census include all living accommodations int ended for occupancy by one household, irrespective of cost or t ype of structure. 2Estimated from Bureau of Labor Statistics data. aData from Federal Public Housing Authority. MONTHLY BUSINESS REVIEW • , 99 veterans returned, the housing shortage in urban areas was aggravated. It is estimated that at the beginning of 1946 an absolute deficiency of 35,000 to 40,000 dwelling units existed in the urban areas of Texas.' The Potential Demand for New Housing The need for additional housing to alleviate the distress arising from the absolute deficiency in housing constitutes only a small portion of the requirements for new units to satisfy the potential demand. National requirements to satisfy the pent-up housing demand, provide shelter for an increasing population, and replace destroyed and substandard dwellings during the 1946- 1955 decade have been variously estimated at from 820,000 to 1,260,000 new non-farm dwelling units annually." Allocation of these ten-year estimates gives an annual potential demand for between 40,000 and 60,000 units in Texas. TABLE IV. DWELLING UNITS BY TYPE-TEXAS-1940 Rural All Urban non-farm Total dwelling units ..... ........ 1,804,884 845,982 383,239 Vacant ........................ 126,488 43,381 23,494 No. reporting state of repair and plumbing .. .. ....... 1,708,045 792,714 365,345 No. needing major repair and plumbing' .... .............. 346,384 87,925 73,069 No. needing major repair only .. . . 52,642 40,539 8,864 No. needing major plumbing installations only .. . .... .. ... . . . 089,168 196,668 168,660 SOURCE: 1940 Census of Housing. IDwellings needing Itmajor repairs" are those requiring repairs or replacements which if neglected would impair the soundncss of the structurc and creatc a haza rd to its safety as a residence. Dwellings needing "major plumbing" are those without a Bush toilet or without running water . . The 1946-1947 requirements for new housing to provide adequate shelter for veterans arc somewhat greater than the average annual requirements during the next decade. The national goal set by the Wyatt Emergency Housing Program has not been formally apportioned among the states," but it is estimated that Texas' share of the nation's twoyear veterans' housing goal is construction of 135,000 new units by December 31, 1947, including 118,000 units in non-farm areas. • The potential demand for new dwelling units is probably not overstated by these estimates of housing needs. If, as seems likely in view of the rising trends of marriages and births, the rate of "family formation" prevailing during the 1930's continues, construction of 38,000 new dwelling units each year will be necessary in Texas to provide living accommodations for new families. Moreover, replacing of depreciated, destroyed, and subTABLE V. GOALS AND ESTIMATED POTENTIAL standard units could swell the State requirements DEMAND FOR NEW DWELLING UNITS during the next decade to construction of 60,000 - -Number of units---- non-farm and 15,000 farm units annually. Eleventh Texas District U. S. The Capacity of the Housing Industry 1946-1947 vctcran's housing goal!. 135,000 158,000 2,700,000 1946-1955 average annual potenA substantial increase in activity above present tial demand 2: or pre-war levels would be necessary in the housing Minimum cstimate. . . . . 40,000 50,000 820,000 Maximum estimate. . . . . . . .. 60,000 75,000 1,260,000 industry and in ancillary industries in the SouthEleventh District and Te.xas estimates based on national data. west in order to satisfy the estimated requirements !lncludes temporary units. for new dwelling units. As the accompany Table 'Permanent, non-farm units only. VI indicates, fewer than 30,000 conventional nonfarm dwelling units have been built annually in Texas ·each year since 1941,' and at the peak of activity in 1941, the housing industry in Texas provided only 39,500 new non-farm units. As has been pointed out, estimates of the potential demand for new housing during the next decade range from 40,000 to 60,000 non-farm units annually and the Veterans' Housing goal calls for construction of 118,000 non-farm units in the State during 1946 and 1947. 'Estimates of the magnitude of the present housing deficiency are subject to large margins of error since they require broad assumptions as to population increase, composition and location, and assumptions relative to depreciation and destruction of houses. "The smaller estimate by F. W. Dodge Corporation; the larger by the National Housing Agency. 6N ational Veterans' Housing Goals: Total Temporary Units Conventional Houses Permanent Prefabs 1,200,000 250,000 1946 . . . . . . 700,000 250,000 1,500,000 1947 . . . . . . 900,000 600,000 2,700,000 850,000 250,000 Total 1946-1947 . . . . . . 1,600,000 'The Bureau of the Census reports that 360,000 non-farm dwelling units were constructed in Texas between 1930 and 1940, an average of 36,000 units annually, but the Census data include such non-conventional habitation as tenantable lofts and houseboats. MONTHLY BUSINESS REVIEW 100 When the war ended, the construction industry was not in a position to undertake residential construction on a large scale immediately. During the boom in private residential construction in 1941 and the first half of 1942, residential construction activity expanded rapidly, efficient work crews were organized throughout the District, and production of building materials was expanded. When private construction was drastically reduced by TABLE VI. NEW DWELLh'lG ill'jITS STARTED, TEXAS government restrictions in 1942, activity was P eriod Ko. of non·f:.rm units' shif ted to construction of publicly financed resi1940 . ... . .. ... . . . ..... . . . . . . . .. ... .. ... . 35,100 den tial projects and maintained at a high level until 39,500 early 1943. Shortly thereafter, publicly financed 1041. ... . . . .. . .. . . . . . . . . . .. . . . . . ....... . .. . . . . 1942 .... . ...... .. . . . ... . .. ... .. . . .. .. . 26,900 residential construction was also curtailed. Restric. . ... .. . . . . . .. ... . . . ... .... ..... . 29,900 1943 .. .. tions on privately financed construction were not 1944 . ... .. . . . . . . .. . . . . . . . . .. . . . .. . . . . . . . . . . . . . . 17,600 removed, and military needs for construction had .. . . . ..... .. . . 26,300 1945.... . .. . .. ............. . . . . been largely met. Consequently, the construction lBureau of Labor Stat istics data are estimates of new residenindustry rapidly cut back its operations. Constructial construction in all non-farm areas based on the nu mber of tion labor drifted into war plants or left the area, permits issued. and m any brick plants, sawmills, and other building material manufacturers reduced operations or shut down . When restrictions on residential construction were relaxed after the end of t he war, it was necessary to reassemble a construction labor force and expand production of many building materials before residential construction on a large scale could be initiated. Residential construction soon increased markedly above war levels, but as Table VII indicates, the number of dwelling units started during the first five months of 1946 was small compared with the number of units required t o satisfy estimated minimum needs. Furthermore, maldistribution of materials, inadequate supplies of skilled labor, and serious shortages of lumber, tile, plumbing, wall-board, and other essential compone nts have delayed completion of dwellings. Surveys conducted in Dallas indicate that only about one-fifth of the 600 units for which building permits were issued in March had been completed by July 15, and similar lags in completion are reported for other metropolitan areas in the District. Ultimately, however, the housing industry should be able to construct new dwellings in sufficient numbers to meet the demand contemplated in the m ore sanguine estimates of potential annual requirements. Scarcity of lumber is likely to continue for TABLE VII. NUMBER OF DWELLING UNITS STARTED some time despite the acceleration of production in AND REQUIRED· recent months, and use of substitute materials to No. units star ted' No. units alleviate the shortage may be necessary. Shortage - - - - - - - - required' 1942-1945 1946 t 1946-1947 of cast iron soil pipe, including fittings, is likely to Amarillo . .. . . ..... . . . . ..... 1,282 625 1,800 rem ain equally acute since the development of new Austin . . . . . . . . . . . . . ... 1,198 1,179 3,680 residential areas will severely tax the existing capacBeaumont . . . . . . . . . . . . . . . . . . 2,104 198 3,100 Corpus C hristi. .. . ... . . ..... 1,724 401 3,470 ity of the industry, which is limited by declining ~i~:~.·. ·. : : :: : :: ::: ::::::: 6'k~ 3, ~~ 1~:~~ supplies of pig iron and scrap. Production of most Fort Worth . . . . . . . . . . .• . 6,962 2,248 7,530 other essential building materials can be expanded ii~~'t';~f " : :: : : : : : : : :: : 2,4~g 1~:?~ rapidly, however, by utilizing existing plants more San Antoni05. . . .. . . ...... . . 5,301 1,593 10,630 intensively. Brick, tile, cement, glass, wall-board, Waco . . . . . . . . . . . . . . 923 372 2,530 Texas met ropolitan . . . . . . 34,718 12,475 68,830 insulation, and most other building materials are Shreveport. . . . . . . . . . . . . . . . . 1,005 . 514 3,340 d d f . I hi h b d t 11 representative T exas cities pro uce rom raw materIa s w c are a un an of 10,000 to 50,000'.... . .. 5,651 1,981 10,487 and manufactured in plants which can be con·"Number started" based on permits issued. The actual nUffi- structed and brought into operation fairly quickly g: bel' of starts is probably slightly smaller. fFirst five months. lBureau of Labor Statistics estimates based on building permits. ' E stimated number of new dwelling units needed to meet veterans' housing goal. 3Includes Highland P ark and University P ark. provided adequate supplies of labor are available. Shortage of labor in the building trades, although a limiting factor, probably will not be a permanent condition and may be offset to some extent by more judicious use of available skilled workmen on large scale projects. Construction of 50,000 to 60,000 non-farm units and 10,000 to 15,000 farm units in . 1947 and each year thereafter in Texas does not appear to be an unattainable objective so far as capacity of the industry is concerned. 'Includes Galena P ark, Bellaire, and South Houston. 'Includes Alamo Heights. 'Brownsville, Bryan, D enton, Laredo, Lubbock, Ma rshall, Port Arthur, San Angelo, Sweetwater, Tyler and Wichita Falls. 101 MONTHLY BUSINESS REVIEW The Effective Demand for Housing Expenditures upon residential construction are closely related to changes in the aggregate income of individuals and to variations in construction costs. An expansion of income payments is ordinarily reflected quickly in an increase in residential building, as the chart comparing the trends of the aggregate income of individuals with the total expenditure upon residential construction shows. The divergence of the trends between 1942 and 1945 reflects the effect of government regulations restricting residential construction which were enforced throughout the war. Had those restrictions not been in effect, expenditures on residential building would have tended to advance to new peaks as they did when the restrictions were removed in October, 194 5. VALUE OF INCOME PAYMENTS AND RESIDENTI AL CONSTRUCTION - TEXAS AWARD~ INCOME -BILL I NS OF D LLARS - MILLION S OF DOLLARS 400 8 I/o 6 4 2 o- 30 0 TOTAL INCOME PAYM E N V J. - - - T " / I- ~~I........ , I _ ..--. - I 00 - TOTAL VALUE OF........ / RESI DENTIAL CONSTRUCTION CONTRACTS .........,- 1940 1938 1942 1944 200 I 946 .. o SOURCES ; U. S. DEPARTMENT OF COM MERCE, F. W. DOD GE CORPORATION VALUAT ION OF RESIDENTIAL CONSTRUCTION PER SQUARE FOOT - TEXAS SOURCE; F. W, DODGE- CORPORATI ON * EST[MATED The demand for new residential construction is also extremely SensItiVe to vanatlOns in construction costs, however, and continuation of employment and individual incomes at high levels does not stimulate a permanent increase of residential construction if the cost of building becomes excessive relative to the income of the majority of the population. I n order that a sustained volume of residential construction may be assured, building costs must be low enough to be supported by the incomes of the large percentage of the population which is in the lower income groups. The rapid increase in the cost of construction which is occurring gives rise to some doubt, therefore, whether the housing industry ~ will be called upon to provide the large number of dwelling units contemplated in the estimates of , potential demand. While the housing deficiency remains acute, distress bui lding will probably support intensive residential construction, but if the upward trends of building costs and land prices continue and are not accompanied by proportionate increases in f amily income, residential building may not be sustained at a high level after the minimum shelter n eeds of the community are satisfied. 102 MONTHLY BUSINESS REVIEW Despite the substantial increase in family incomes which has occurred since 1940, the number of families which can support high-cost dwellings is small. In 1939, 85 per cent of the families in Texas received wage or salary incomes of less than $2,000, and 95 per cent received annual incomes of less than $3,000. Approximately 85 per cent of the families in the State expended less than $30 monthly on shelter, and 95 per cent expended less than $50 monthly in that year. Although family incomes have nearly doubled since 1939, on the basis of estimates of current income distribution it appears that approximately 80 per cent of the families in the State are still unable to pay more than $50 monthly for shelter or to support a residence costing in excess of $6,000 without diverting too large a portion of current income from essential expenditures for food, clothing, and family maintenance. ~ 111 It has been a common assumption that families will utilize their savings to support the purchase of new homes. Investigations conducted throughout the nation relative to the ownership of liquid assets indicate, however, that the majority of family units have not accumulated sufficient savings to support a large down payment on a home. Moreover, most of the families which have accumulated large savings apparently do not intend to use their surplus for that purpose. The development of "low-cost" dwellings is also prerequisite to fulfillment of the veterans' housing program. In order to meet the urgent needs of veterans for housing, it is necessary to build a satisfactory unit at a cost which the average veteran can afford. Surveys of World War II veterans' housing intentions and ability to pay reveal that at present building costs most veterans cannot compete for new housing despite the liberal financing policies provided by the Veterans Administration's guarantee of veterans' loans. In Dallas, the typical gross monthly rental (including cost of heat, light, and cooking fuel) which veterans estimate they can pay is approximately $40; the typical expenditure for a home they estimate they are able to support is about $6,000. Three-fifths of the veterans who indicate they are planning to buy or build are able to pay less than $50 monthly for housing, including the cost of taxes, insurance, heat, lighting, and cooking fuel, as well as interest and retirement of principal, and it is reasonable to assume that in many areas in the District the gross monthly cost of housing which the veteran can support is much smaller. The housing industry would find it difficult to build satisfactory dwelling units cheaply enough to satisfy such a demand at present material and labor costs and using present techniques of building. ~ 111 Although the construction of low-cost housing units has not been entirely uncommon in the past, in general, shelter has been provided communities by concentrating upon the construction of medium and high-cost dwellings for the middle and upper in~ome groups. A large proportion of the population, then, has obtained its housing by shifting into the depreciated dwellings from which the middle and upper income groups have moved. The present acute need for housing is too great, however, to be met in that manner. To alleviate the distress which the housing shortage is causing veterans and others, it will be necessary to provide new dwellings at costs which are within the range of incomes of the large number of families who, in effect, comprise the mass market for housing and who now are most severely affected by the acuteness of the housing shortage. Housing to meet the requirements of the average American family receiving an "average" or "typical" income must be low-cost housing. Easy financing methods will not alone solve the problem, although they may contribute to the solution. If the low and low-middle income groups of our population are to be adequately housed, the alternatives seem to be either subsidization in one manner or another of residential construction or a greater application to residential construction of the principles of mass production . which have been so successful in reducing costs in other durable goods industries. Surely the latter alternative is highly preferable. It is evident that the techniques of mass production designed to lower unit costs have not been fully applied to the construction of housing and, consequently, we have not been able to lower costs sufficiently to tap the large potential demand of the mass of consumers for adequate housing. It is recognized that there are barriers to such a modification of building techniques and practices. The barriers may be serious, but they should not be considered insurmountable. The advantages which would accrue, both economically and socially, to all segments of the population and the financial benefits to the construction industry would be so great as to justify every effort toward achieving the objective of low-cost housing for the mass market. 4 103 MONTHLY BUSINESS REVIEW Review of Business. Industrial. Agricultural. and Financial Conditions In the year which has passed since the end of hostilities in va:uum cleaners, electric ranges, and sewing machines. The orthe Pacific, industry in the Eleventh Federal Reserve District der pl;\ces the same limitations on manufacturers' photographic and in the Southwest genera 11 y has achieved a level of activity cq uipInl n t and some building materials. which closely approximates, and in some particulars greatly exIn district department stores which report a monthly breakceeds, the level of June 1945, when war production dominated down of sales by type of transaction, charge account sales durthe industry of district and nation alike. Construction activity ing June constituted 54 per cent of total sales, as compared with in general, measured by the value of contract awards, has more 43 per cent at the end of hostilities in August 1945. The expanthan trebled, while residential construction has increased more sion thus revealed in the use of retail credit by consumers may than tenfold. T he high level of district productive enterprise be attributed in part to higher unit prices of many items but is reflected in a total of nonagricultural employment in general, in larger part to the buying of both non-durable and durable and of fac t ory employment in particular, greater than in any goods in greater variety. The relatively small proportion of duraother peacetime period. Timely rains in portions of West and ble goods as yet coming into the market is indicated by the Northwest Texas in late June and early July and generally open fact that percent.gewise instalment sales in both department weather in the eastern part of the district during the past month stores and furn iture stores have shown practically no change in improved the farm outlook. Hot, dry weather, however, dur- recent months. ing the latter part of July over most of the district has \'\fith the purpose of adapting controls on consumer credit depleted moisture and caused some deterioration in crops and ranges. In the New Mexico and Arizona portions of the to changing relations in supply and demand, the Board of Govdistrict protracted drought has reduced the condition of ernors of the Federal Reserve System by issuance of Amendranges to the lowest point since the middle Thirties. The July ment 20 to Regulation \'\f made effective on July 5, 1946, the 1 report of the United States Department of Agriculture on following five modifications in the provisions of the Regulathis year's crop conditions reveals that total acreage of crops tion: in Texas for the year is about equal to the acreage harvested in I. Instalmen t sale credits in amounts in excess of $1,500 are 1945, with anticipated vields somewhat higher than last year in exe mpted from the requirements of the Regulation. such importa nt crops as corn, wheat, potatoes, and peaches. Oats, 2. Attic ventilating fans, automobile batteries and accessories, rice, and hay are expected to fall somewhat below the relatively high yields of 1945. Department and furniture store sales in and tires and tubes for passenger automobiles are removed from the district during June and July declined seasonally from the category of "listed articles." the high levels of the past spring but showed considerable 3. Combination kitchen or other household units arc added gains over the same months of last vear both in sales and in ro Group A of the "listed articles" if they incorporate cook . stocks. . stoves or ranges, electric dishwashers, ironers designed for household use, mechanical refrigerators of less than 12 cubic feet BUSINESS capaci ty, or household washing machines. Operation of seasonal factors during June resulted in a decline of 10 per cent below the May level in sales of monthly WHOLESALE AND RETAIL TRADE STATISTICS reporting department stores of the district. Compared with the ::::::~~P~rere~n~~e~CM~D~~~in~~~~:::: Number : Nets.'LleaStoebt same month of last year, however, June sales were up 32 per of June 1946 from Jan. 1 ~ June 1946 rrom cent, thereby slightly exceeding the 31 per cent margin of in- Pct.'l.i1 trade: reporting Jllne 1hy June 30.1946 June May firms 1045 1046 from H)45 19{.5 194.6 Department litotes: crease which May sales of this year showed over the correspond Total t1 th Dist.... 48 +32 -10 +28 + '8 + 5 ing month of 1945, and holding the cumulative increase in sales Cnrpu8 Christi 4 +25 - 8 +21 +21 + 5 7 Dalbs . . ... . +35 -14 +31 +25 + 3 for the first six months of this year over the same months of Fort Worth .. 4 +25 -13 +22 +14 + 5 7 Houston . . ..... . +47 - 3 +33 +25 + 6 last year at 28 per cent, the same cumulative increase as for the SaIl Antonio . .. . .. . 5 +25 - 9 +28 +14 + 3 first five months of the year. Preliminary reports from weekly +29 - 1\ +24 3 Shreveport, La.. .. . 18 +23 -12 +21 + '0 + '8 Other cities . .... .. . reporting department stores for the first two weeks in July Retail furniture: indicate that because of seasonal influences sales are currently 'flltHl llth Disl.. ... 49 -H6 - 3 +30 +10 D!lllos . .. 3 +27 - 7 at the lowest level since January, though running well ahead Houston..... ... :; +42 +13 Port Arthur...... 3 +45 - ]3 of the same weeks of last year. Ran Antonio.... . 3 +36 - 8 Sh rcycport, L! .. 3 +62 - 4 +2i +i3 Merchandise st ocks of monthly reporting stores increased 5 trade:· per cent during June over the previous month and 18 per cent Wholt'&'lle Machiner,v eqp't &: supplies. _. . . . . . . 3 +64 +60 .. . over June of last year. In contrast with a negligible rise during Automotive supplies 5 +31 -IS No chg. - () May, orders outstanding in June exceeded those of the previous 8=J~~~·.1~~~ol'8). ~~ t~~ =1 ~ +20 +lg ~ month and of the same month last year by 29 per cent and 61 Hnrdware . .. _. 13 +16 - 2 +38 +21 +6 per cent, respectively. · ColDpileJ by United StaWs Bureau of (A)n:rus (wholesale trade figures preliminary) . tStocks at end of month . June sales of reporting furniture stores in the district showed a slight decline of 3 per cent, as compared with sales in the INDV.xES OF DEPARTMENT STORE SALES AND STOCKS previous month, but were 46 per cent greater than t hose of Daily average salea-(l936-1939-100} June 1945 . Furniture stocks in retail stores showed increases of Adjusted Unadjusted' May May April June April June June June 10 per cent over the previous month and of 30 per cent over 1946 1046 1946 H145 1946 1946 1945 194& June a year ago. 228, 342 352 20Sr 322 335 368 District . ... . 313 352 3.14 270 331 336 221 374 Da!lr.."l ••• • • . 307 D ealer's stocks of furnit ure and household appliances may be Houston .... . 336 387 333 329 253 320 32& 220 ~proved aft er August 15, effective date of a Civilian ProSlook.--(1936·1989 -1(0) ~uction Administration order which forbids manufacturers of Adjwt.ed UnadjuJted' those items to hold in inventory more than thirty days' output May April June June May April June June 1946 1045 1946 1945 1946 1946 194& 19'6 of their factories or more than a "practicable minimum work253 241 209 201 208 203 246 229 District . .... ing inventory," whichever is less. Important consumer articles ·UDadju.ted ror aeaeoosl varie.tioD. affected include furniture, refrigerators, washing machines, ,...Reviaod. • = 104 MONTHLY BUSINESS REVIEW 4. The cost of "listed articles" included in loans for repairs, alterations, or improvements is brought under the Regulation. 5. Loans for hospitals, medical, dental, or funeral expenses are subject to the Regulation unless made on borrower's written statement that the proceeds are to be paid over in amounts specified in such statement to the creditor or creditors whose names, addresses, and occupations are set forth therein. In addition to the statements already prescribed, the borrower must state he is unable to meet the requirements of the Regulation with income available for the purpose and failure to obtain the extension of credit would cause undue hardship to him or his dependents. AGRICULTURE . The 1946 total acreage of all crops for harvest in Texas is estimated to be about equal to that harvested last year, according to the July 1 crop report of the United States Department of Agriculture. Throughout most of the Eleventh District unfavorable weather in the form of excessive rains in some areas and drought in others during the latter part of the spring planting season prevented the seeding of the full intended acreage of many crops. The wheat acreage harvested in Texas this year, however, was 1 per cent greater than that of last year. The acreage of other major crops is about the same as in 1945. The growth of crops was encouraged by generally favorable weather from the middle of June to the middle of July throughout most of the district, with the exception of the unseasonally wet upper coastal counties and of some areas in the far west and on the High Plains, where drought conditions persisted. During the latter half of July dry weather and abnormally high temperatures in most areas retarded the growth of crops and range feeds and reduced stock water supplies. ° The United States Department of Agriculture estimated the cotton acreage in cultivation in Texas on July 1 this year at 6,350,000 acres. This estimate, approximately four per cent above the small acreage in cultivation on the same date last year, is only about two-thirds of the 1935-44 average, aod is the second lowest cotton acreage since 1895. The United States acreage was estimated at 18,316,000 acres, compared with 17,749,000 .cres on the same date last year and a IO-year average of 25,608,000 acres. In the west and northwest districts of Texas, extremely dry weather throughout the planting season reduced the acreage below intended .mOWlts, while in the central and eastern part of the State excessive moisture by delaying planting caused some loss of acreage. An increase in cotton acreage over 1945 was indicated in irrigated Trans-Pecos and lower Valley counties. Over most of the district, weather conditions during July were favorable for the growth of cotton and the control of insect infestations. Insects are still numerous, however, in central and eastern Texas. Open weather permitted needed cultivation in the eastern portion of the district, and most fields were clean as the month ended. The drought in the northwestern part of the district was partially broken by rains in the latter part of June, and most of the acreage that had been brough t to a st and in that area was making good progress at the end of July. The acreage of corn for harvest in Texas this year was estimated on July 1 at 3,968,000 acres, compared with 4,177,000 acres last year and the 10-year average of 4,972,000 acres. The forecast production of 67,456,000 bushels for this season is slightly above the 1945 crop, but about 16 per cent below the 19 35-44 average of 80,209,000 bushels. Excessive rainfall in the eastern part of the district during the planting season caused some reduction in intended corn acreage. With favorable grow- ing conditions, however, in June and July, early planted Corn is largely made and in good condition. Showers arc needed on late plantings except in the southeastern counties, where mois- ~ ture is still adequate. • The 1945 Texas wheat crop was estimated on July 1 at 53,613,000 bushels, compared with 41,778,000 bushels harvested last year aod the 1935-44 average of 33,557,000 bushels. Cool, cloudy weather with showers during the latter part of the growing season partially offset the earlier damage done by the drought in the Panhandle and resulted in a better yield than had been expected. The estimated 5,106,000 acres of wheat for harvest is the largest wheat acreage on record and compares with 4,642,000 acres harvested in 1945. The indicated yield on July 1 of 10.5 bushels is above the nine bushel yield last year but slightly below the 10-year average of 11.1 bushels. Oat production was reduced by unfavorable weather early in the year and by green bug infestations. The indicated barley crop for 1946 is slightly below that of last year. Rice production is expected to fall below the large crop of last year but will be well above the 193544 average of 13,926,000 bushels. Tentative estimates for Texas place the acreage of grain sorghums grown for all purposes at 6,424,000 acres, compared with 6,298,000 acres in 1945. Planting operations were completed in the High Plains in July, while in southern counties the harvest made good progress during the month. The estimated acreage of 1,385 ,000 acres of tame hay for harvest this season is three per cent bclow the 1945 acreage. The indicated production of 1,316,000 tons is slightly below that of last year but 11 per cent above the 10-year average. This year's estimated peanut acreage of 838,000 acres is about five per cent below the acreage for last year. From an acreage of .. Irish potatoes estimated at 62,000 acres, the indicated produc- ~ tion on July 1 was 5,642,000 bushels. The acreage is about 11 per cent above that of last year, and production is about 21 per cent above last season's crop. The acreage in sweet potatoes Was estimated at 64,000 acres compared with 52,000 acres last year, and production was expected to reach 5,120,000 bushels, a 13 per cent increase over last year and over the 10-year average. Favorable weather in June and the first part of July in most commercial vegetable districts encouraged the growth of crops and facilitated harvesting. Since early June there has been a heavy movement of watermelons and cantaloupes to market. Preparation of land and seed beds for ea rly fall crops in the southern part of the district has made good progress. Some planting direct to fie lds has occurred in the lower Valley, and transplanting of fall crop peppers and tomatoes has been progressing in the Winter Garden area. Fruit crop prospects in Texas arc favorable. An above average peach crop of 2,496,000 bushels was forecast on July 1. Citrus orchards started the summer period in good condition. Many orchards were requiring irrigation in July, however, in spite of good rains received in most citrus areas during June. Trees are in healthy condition; the fruit is well sized; and the drop in June was very light. Late June rains in the central and southern High Plains of Texas relieved the drought that had prevailed for months in that section, and summer range feed prospects are fair to good in all major areas, except in the western Trans-Pecos counties. Range grass, however, is beginning to dry in widely scattered counties from north Texas to the Edwards Plateau, " and the growth of new range feeds has been retarded by the . high temperatures which have depleted surface moisture. In Arizona and New Mexico the drought situation continues, with the poorest July 1 range feed conditions since 1934. 105 MONTHLY BUSINESS REVIEW Stock water is short, and prospects for late range feed are "enerally very poor. Cattle, calves, and sheep are in good flesh ~in all areas in Texas except in the Trans-Pecos, where some shrinkage is reported. Livestock in the High Plains counties were losing weight prior to the rains late in June, but at present with the growth of new grass their condition is improving. Cattle continued in good condition in Oklahoma, but in New Mexico livestock arc shrinking, and calves and lambs are showing the effect of dry, short feed. Some forced movements of cattle and sheep from New Mexico ranges and other dry areas in the west rn part of the district has been reported. In Arizona cattle and sheep ha ve held up well until recently, but are now beginning to show the effects of dry, short feed and arc in only fair condition. The movement of cattle and calves into the Fort Worth and San Antonio markets in June was heavier than in May, but considerably lighter than in June of last year. Receipts of hogs at these two markets fell far below those of May this year and of June 1945. The movement of sheep increased considerably during June over the pervious month, hut continued to fall below the rate for the same month of last year. Receipts of cattle and calves at these markets rose sharply after July 1, hogs increased slightly, but receipts of sheep were greatly reduced. For the first six months of 1946 cumulative receipts of cattle and calves totaled 651,455 head, or only 71 per cent of the receipts for the same period last year. Sheep receipts of 1,~ 98,983 head were 89 per cent of the total for the same period r ast year. On the other hand, hog receipts for the six months were 353,023 head, or 11 per cent above the corresponding period in 1945. The mid-June price report of the United States Department of Agriculture indicated that prices received by farmers for most crop and livestock products have continued to rise. The most significant increase occurred in beef animals and sheep. Small gains were registered by wheat, corn, oats, barley, cotton, and cottonseed. Butter and milk also registered smali increases, while potatoes, sweet potatoes, and hay declined significantly. Prices of most farm commodities have risen sharply since July 1. A particularl y marked rise has occurred in the prices of cotton) corn, wheat, and grain sorghums. FINANCE The daily average of combined gross demand and time deposits of member banks in this district for June declined $3,500,000 from the May average, continuing at a somewhat reduced rate the generally downward trend in evidence since January. Nevertheless, the average of these deposits in June, amounting to $5,444,000,000, exceeded the average for June 1945 by $73 5,000,000. The decline from May to June this year of $8,926,000 in gross demand deposits was due principally to Treasury withdrawals from war loan accounts at depositary banks and the redemption in cash of a substantial amount of Government securities. Time deposits increased further in conformance t Vith the trend since the beginning of the war. The average reserve balances of member banks in this district which had shown a downward trend from February to April increased during May and June and in the latter month were only about $4,000,00 0 below the all-time peak recorded in Jan- CASH FARM INCOME (Thousands of dollars) --Marth 1911&&------Totalreceipta...----Receipt. from- March .March Jan I to March 3 1, Crops Livestock· 1~6 1945 1946 19~5 111.472 13.427 114.899 114.000 134.270 13~.399 Arizona ........•••.•.• 6.232 4.814 11.086 12.817 37.497 12.199 Louisiana. ... 1.291 3.930 1.221 0.661 13.859 17.730 New Mexico ............ . 9.162 16.068 25.230 29.581 77.350 91.343 Oklahoma . .........•.•.. 36.282 41.962 78.244 78.616 213.654 234 .995 T..... Total. ........ 164.439 170.241 1134.680 1140.471 1376.830 1421.666 ·!oeludet recejpta [rom the sale of liveatock and livestock products. SOURCE: United States Department of Agriculture. CROP PRODUCTION-(Thousand6 of units) Units Bushels Winter wheat . . Bushels Corn ...•.. BusHels Oats ... . Bushels Barley ... . Tons Tame hay ..... . Potatoes, Irish ......... . . Bushels Potatoes, sweet ......... . Bushels Rice . . ....... ... . . ..... . BIISh.1s _--Texas--_-Ele\'enth DistrictEstimated Estimated HI45 Jul)' 1, 1946 1945 July 1, 1946 42.546 13.613 41.778 54.287 80.183 ~7.4!6 66.832 17.400 37.371 42 .411 40.711 47.001 9,1673,616 3,857 8,4721.937 1.316 1.344 1.884 5.433 5.642 4.648 6.406 16.098! ~.120 4,124 16.500\ 41.0281 16.400 18.000 37.1108 -Arizona, New Mexico, Oklahoma and Texas. tLouieiana and Texu. tLouisiaoll., Oklahoma and Texa!. SOURCE: United States Department of Agriculture. ACREAGE-(ln tho,sand. ) TCJ:1\8 Eleventh District - - _ Fo, - - Harvested - - Fo, _ - Harvested-harvest. Average harvest Average 1935-44 11H5 194. 1945 193544 1946 12.925 6.350 9.454 6.133 8.63 1 8.'49 Cottont .. 3.968 8.514 7.023 4.177 6.802 Corn ..... ............... '.972 5.106 7.4621 10.4911 11.2331 3.031 4.642 Wheat ... ............... 1.62~ 2.921 3.038 2.852 1.404 1.806 Oata ..... 5971 5051 4331 226 218 266 Barley ... 27 18 15 Rye .... M~l ~~i ~g~l 100 292 400 RUle .... .... ...... ..... 60· 90· 76 25 63 Fllu: .. 2.727 3.182 1.385 3.091 1,207 1.431 Tame hay .. 212 673 753 212 214 Wild hay ..... 73' 140 135 141 56 62 55 Potatoes, Irish ........... U-i5& 175° 20n9 52 64 59 Potatoes, sweet ..... , .... 8.730 9.375 7.238 7.2~1 9.340 6.363 All sorghum, except syrup. 1,1{)49 1,145& 7566 549 882 838 Peanub3 (aloDe) .......... 229 783 8 3773468 537 254 CoNPCas (alone) ..... .... ... ....... .............. .............. 9'· ............ .Texaa, Ari.tona, Louisiana, New Mexico and Oklahoma. t Acreage in cultivation, July 1; tAri.tona, New Mexico, Oklahoma and Texa8. §New Mexico, Oklahoma and Texas. ·Louisiunn. and Tems. bArizona, Oklahoma. and Texas. 61.ousiiana, Oklahoma and Texas. SOURCE; United States Department or Agriculture. LIVESTOCK RECEIPT8-(Nwnbe,) CuUie ...... Calves . ..... ..•.•... Hogs ..... Sheep ...• _ - - F o r t WorLh...---_---San Antonio - -June June May June Juno May 1946 1945 1940 1946 1945 lIH6 64.683 79.493 60.328 20.243 28.455 19.722 22.330 28.308 18.174 9.1 86 22.517 12.256 12,196 38,028 37,586 1,538 4,431 7,400 546.526 586.646 433.027 107.069 111.392 76.591 COMPARATIVE TOP LIVESTOCK PRICES (Dollars per hundred weight) _ - - F ort Worth May June June 1945 11H6 1946 $17.35 116.50 Deer steers . .. ...... . ..... 117.35 16 .00 14.00 16.50 St~er steers, . .......... 17.35 17 .3. 16.25 Heifers and yearlings ..... 1a .00 14 .25 15 .00 Butcher cows. 14 .60 16.50 17 .35 Ca1vea ...... 14.65 14.1lS 14 .M Hop ... .... . 14.75 15.50 11 .50 Lambe ..... . June 1946 117 .00 17.00 14 .00 17 .00 14 .65 14 .25 San Antonio - - Juno May 1945 1946 S15.25 S15.25 ii:i6 11.10 14 .25 14 .55 12 .7~ . isiiO 14.00 16.00 14 .65 13.75 uary. Throughout the period, there was a steady increase in required reserves and a consequent decrease in excess reserves. In June, excess reserves averaged approximately $105,000,000 or nearly $40,000,000 below the January average. The seasonal upturn in the circulation of Federal Reserve notes of this bank that began in May continued during June and the first half of July, reflecting in parr the heavy demand MONTHLY BUSINESS REVIEW 106 for curren cy over the July 4 holiday week end, and total circulation on J uly 15 aggregated $59 7,900,000, or about $4,200,0 00 higher t han a month earlier. In consequence of the $22,500 ,00 0 decline in Federal Reserve note circulation during the first six and one-half months of the year, the increase ill total circulation as compared with a year earlier was only $16,000,0 00 on July 15, as against $72, 00 0,000 at t he beginnin g of the year. T otal depesits of weekly reporting member banks in the district decreased $50, 100,000 during the four weeks ended July 10, bringing the net decline since mid-January to $24 0,000,000. T he decline during the four weeks, as well as for the six months period, resulted chiefly f rom the Treasury's withdrawals of war loan deposits at reporting banks. During t he first four months of the year, there was a sharp decline in interbank depesits as count ry banks withdrew balances from correspondents to obt ain funds to meet war loan calls and to increase loans and investments. The recent expansion in interbank depesits, however, has partially offset the earlier decline. The decrease in total deposits has reflected largely the effects of the debt retirement program of the Treasury. Since a larger proportion of the securities redeemed in cash were held by the banking system, only that portion of the funds disbursed to redeem securities held by nonbank investors flowed back to the banking system as privat e deposits. During the four weeks between June 12 and July 10, the inves tments of repertin g banks declined $4 2,300,000, reflecting chiefly the decrease in certificates of indebtedness and Treasury notes, most of which were associated directly with the deb t retirement program. Total investments have declined by $160,000,00 0 since mid-January. The decrease of $1 0,300,000 in loans during the fou r weeks reflected the liquidation of $6,900,000 of commercial, industrial, and agricultural loans, and $9,400,000 of loans to others than brokers and dealers for the purpose of carrying securities. The latter loans, represent ing mostly advances for the purpose of carrying Government securities purchased during the Victory Loan D rive, have declined slowly since the peak was reached on December 12, 1945, but there has been an accelerated liquidation in recent weeks. Nevert heless, the total of these loans outstanding on July 10 totaled $132,500,000. Despite the recent decline in commercial, industrial, and agricultural loans, the total on Jul y 10 was $106, 000,000 higher than a year earlier. The continued upward trend in real estate loans and in " all other" loans represents a continuation of the upward trend that has developed as a result of the increased building activity and of the improvement in the supply of consumer goods. CONDITION STATISTICS OF WEEKLV REPORTING ME MB ER DA NKS IN LEA DI NG CIT IES-El eveIl1h Federal Re!er l'e Dist rict (Thousands of dollars) 1940 Total gold certificate resea:ves . . . Discounts for member banIa! . . . . Foreign loan8 on gold ............. U. S. Government securities Total earrung assets. ........... Member bank reserve deposita . . . Federal R eserve Notes in actual circulation . . . .. .. .... ... 1489.8110 None 3.840 915.382 !119,222 700,1 34 697.938 J une 15, 1461.435 76 NOlle 84.0,74 2 840.817 093.133 582.299 1503.325 144 3.840 896.879 900.863 762.702 1946 593,713 1,41 6,826 74,604 409,979 269,561 613,208 145 49.329 367. 447 273,339 1,221,599 204.025 383.783 590.465 NOlle Ju ne 12, 1946 12,069,427 680.394 401,261 7.567 141.874 41.8019 288 87.545 1.389.033 43.530 414.928 215.808 1147.285 145 67.337 400.931 235.54 6 1.457.893 308,762 288.525 556.sa6 None (Thousands or dollara) June June 1946 Abilene ....•. " ... . . ,," 1 23.394 Am&rillo .. . , . 59.186 96,296 Austin ..... .. Bea.umont .... .. , . . . .. . .. 57.355 6.\,035 CorpUll Christi, . ....•... . 6.528 COnlicana . •• •. •.••.•.. . . Dallas . .• . • . •.•.• • .•.. . . 71 3.020 El Paao ......... . ..... . . 83.275 Fort Worth . .. ........ . .. 254.322 04,007 Oalveaton . . . .......•• . •. Houston .. .. . .. . .. • •.•. . . 672.717 Laredo ... . . ... . . ..•••... 15.140 41.251 Lubbock,., . . ,,"""" . Monroe, La .. . . . ...•..... 22 .051 Port Arthur ... . ...... . .. 25.522 10.526 Hoewell , N. M .. . San Angelo ... .. ........ . 24.872 208.826 San Antonio ... . .. .. ..... 89.786 Shreveport, La•...•. . .... Teurkana. . ...•. . . . . .... 20.251 44,778 Tucaon. MI ..... ..... . . . 29.562 39.044 39.026 Wichita Falls ........... . ~~~: ::::::: ::: :::::::: 1945 18.208 Pctg.change over year H8 + 16 + 19 -8 +t - 20 + 4 + 15 + 2 +t +2 +8 + 22 +23 + 2 + 10 + 18 +15 + 1 - 10 + 24 + 14 +2 7 + 4 51,197 81.0sa 62,065 65.029 8.184 6801.839 72.538 250.228 53.999 661 .860 14.007 33,731 17.951 24.904 9.550 21 .123 181 .707 88,754 22 .458 36.213 25.8010 31 .248 37.043 Mny 1946 Pctg.chana:e over month 23 ,171 55.207 82.249 57.324 63 .809 7.958 683 ,332 87.690 223.428 53.23 5 656.098 16.379 36.8016 24,560 24.671 11.353 22,81 2 205.475 93, 707 19.891 49.333 30.279 37.83 7 39.043 + 1 +7 +17 +t +2 -1 8 +4 -5 +14 +1 + 3 - 8 +12 - 10 +3 -7 + 9 +2 - 4 +2 - 9 -2 +5 -t • 52 .605.697 Total-24 cities . ... ,. 12.696.270 S2.5Sli ,319 +6 +3 ·Includes the li gures or t wo banks in Texarkana, Arkansas, located ill the Eighth District. tChange less than one-half or one per cent. GROSS DEMA N D AN D TIME DEPOSIT S OF MEMBER BANKS E leventh Federal n eierve Distriet (Avera.a;e or daily figures-Thouaa.nda of dollars) Combined total G."", demand 1944 .. . .. .... . 13.361.412 June June 19-46 .. 4.299.715 February 1!J.46 . .. . .. . ... 5,097.096 Man:!> A il 11146. 1946 . J une 1946 . . ~r.y 1946 .. 5.101.702 . 5.012.002 4,{l66,772 . 4.957.846 Time Reserve city baw a ."" demand 1296,955 11.749.241 409,205 2.1S9.248 457.348 2.620.309 465,564 2.592.431 472,155 2.520.721 480.926 2.480.288 486.339 2.461.342 Country bauQ a"", demand Time TiIDI! 1184.628 11 .612.171 11 12.327 263.505 2.110.467 145,700 293.575 2,476,787 163. 773 296,725 2.509.271 168.83 9 300.908 2,491,341 171.247 305.520 2,486,484 175.406 310.839 2.49M04 175.500 SAVINaS DEPOSITS J une 20, 1046 Fort Worth .. .... .... .. .. Galveston .• . . . . . • •.••• . • Howton . ... .•. . ..•.. . . .. Lubhock ... . ............ Port Arthur .•.•.. , • . • • • • Sao Antonio . • ••. • . .••••• Shreveport, La.... • .•.• . • Waco .......•.. . ...•. • . • Wle:hita Fa.lls ......... . .. All other . . ..... .. .. .... . an.. 3 8 2 3 4 8 2 2 5 3 3 3 57 Total . .. •..••. 103 Beaumont ••. • •• . • • •• • ••• Da.llas .. ...... . . . • . •• .• • July 15. 1945 1945 11.886.437 469.611 288.158 4.848 94,925 23 ,71 1 206 57,763 DEBITS TO I N DI VIDUAL ACCOU:-iTS CONDITION OF THE FEDERAL RESERVE BANK OF DALLAS J uly 16, J uly 11, 1946 · I noludes aU demand deposita other than interba.nk and United States Government, lesE cash it-eml reported on hand or in prooess of colleetion. Number rera:r1.ing (Thousands of dollars) July 10, Total loana aDd investment. . . . . . . .. . . . •.. . • . ... . . . $2 ,0 16,80 9 T otalloana . . .. . . . . . . . . . . . . . . . . • . . • . . . . . •. . . . . . 670,085 Commercial, industrial, and aaricultural loam . . 394.392 LoaDJ to broken and dealers in Itcurities . . . 8,496 Otber loans for purcllasing Or carrying securit ies. . 132,500 Real estate loans.. ........ . . . . 43,968 Loane to banka.. . ... . .. .. . . ... . . . 31n All other lOll'll. . . . . . . • . . • • • . . . . • . • .. . .. • 90,338 T otal inve6twenta . . . . . .. .. .. .. .. . .. . . . . . . . 1,346,724 U S. Treasury bill! . . .. . . . . . . . . . . . . . . . . H ,3 13 U· S. Treasury certificat es of indebtedness 403,245 U· S. Treasury nM ... . . . . .... . . ........ .. 181,695 U. S. Government bonds. . . . . . . .. ... . . . . . . . . . . fW6 ,419 145 Obligations guaranteed by United States Gov 't . . 70,007 Ot her securitiea .. . ..... . . . . . . . . ..... ... . . . . .. Resery8S with Federal Reserve Bank. . . . . . . . . . . . . 410,160 Balances with domeatic banQ.... . . . . . . .. . . ... . . . . . 232,408 Demand deposita-adjusted · . . . .. . . . . . . . . . . . ... . . . 1,4.61,985 Tune dej)OSlte ... . . .... ... .. . . . . . . . . ......... .. .. . 311 ,043 Un ited 6tntes Government deposits .. ............... 219,861 Interbank deposlta .. .. . . ... . . . 568,U73 BorrOWings from Federal Reserve Bank . . . . . . . NOlle E1 Paan .•... . .•.• ...... • Number of aaviog8 depoaitora Percentage change in savings deposita from Amount of savin~ depolilb J une 30, 12.573 130.718 30.41 8 40.705 24.41 3 103.533 933 6.167 36.647 33.418 9.41 0 7.384 61 .307 I 7,843 .277 73,042,205 23,378.168 32.807.414 20.366.758 71.440.802 2,41 8.195 5.521.492 43.882.261 26.005.834 9.086.903 4.780.977 51.027.822 m5 + 14 .4 + 24 .5 + 30 . 1 + 20. 5 + 17 . 2 + 16. 6 +287.9 + 18. 1 + 21.7 + 18.9 + 24.0 + 10. 1 + 21.1 497.626 1371.1102.108 + 21.3 May al, 19'6 + .1 + 2 .2 + 1 .2 + 2 .2 +1.1 +1.1 -4 .1 + .1 + 2 .3 + .7 + 2 .4 + .8 + .9 + 1.5 • 107 MONTHLY BUSINESS REVIEW INDUSTRY ~ Twelve months ago act ive combat ended in tbe Pacific. The r "suing readjustment of our economy has been complicated by :In acute housing shortage, scarcity of materials, price increases, and widespread labor unrest, all of which have contributed to uncertainty and confusion and at times obscured the progress made in converting from war t o peace. Nevertheless, this first postwar year has been a period of major accomplishment. Although progress in providing goods to supply the pent-up demands accumulated during five years of war has not been satisfactory, the rapidity with which the labor force has been redistributed, the military personnel discharged and assimilated into productive employment, and the complex industrial machine retooled to produce consumer goods has surprised the pessimists who foresaw large-scale unemployment, delays in reconversion, and general business deflation as consequences of the peace. At this time more people are engaged in productive activity than at any time in the nation's history. The resources and manpower of the Eleventh Federal Reserve District are also being used intensively in meeting the increasing demands of the postwar economy. The shift from wartime to peacetime operations was accomplished somewhat more expeditiously here than in other areas, partly as a result of an earlier start (reconversion began in some plants in the Southwest early in 1944), and partly because the type of work upon which the Southwest had con. ccntratcd during the war permitted conversion to peacetime ~roduction without extensive retooling. Most of the plants in this district found major readjustments in machine processes or facility layouts unnecessary in order to undertake production of goods for civilian consumption. Little change was required in apparel plants, food processing establishments, or refineries; producers of oil-well supplies and agricultural machinery found reconversion presented only simple problems; and the chemical and lumber industries experienced virtually no mechanical reconversion difficulties. Readjustments in the labor force were also accomplished quickly and in an orderly fashion. Lay-offs at shipyards, ordnance and aircraft plants, in which the greatest reduction in the labor force occurred, were largely offset by increases in employment in construction, trade, and services. Non-agricul tura l employment in this district, even at its postwar low in January 1946, was substantially greater than in any month prior to 1942, and since January it has increased at a fairly steady rate, regaining a large part of the loss sustained during the initial period of postwar adjustment. The progress which has been made in shifting from military to civilian production is best revealed by a comparison of present, war-peak, and prewar levels of employment. Total civilian employment in nonagricultural occupations is at an all-time high in the nation and near the war peak in this district. In Texas, approximately 400,000 more persons arc now employed ..,n commercial and industrial establishments than in any month . . , 1939, and only 75,000 fewer than at the wartime peak reached late in 1943. The slight decline in nonagricultural employment from the war peak reflects reduced employment in shipyards, aircraft plants, and some chemical plants, and reduction of civilian employment in military establishments. The increase over the prewar level reflects a general rise in employment in virtually all types of activity. NO~-AGRICULTURAL - M'I'IIL, tolAY AMI JUNE [511"""1(0 SOUR'f. IlEP'!'~TMENT OF l460If, eUREAU Of' LA80R EMPLOYMENT IN TEXAS STATISTICS Employment in manufacturing plants in the State is approximately 80 per cent larger than in 1939, although 30 per cent smaller than at the crest of wartime manufacturing activity in November 1943. As the accompanying table indicates, the number of workers employed in refineries, apparel plants, food processing establishments, plants manufacturing transportation equipment, iron and steel plants, and establishments manufacturing machinery is much larger than before the war. Small to moderate increases in employment have occurred in all other categories of manufacturing activity in the State. MANUFACTURTXG EMPT.QYMENT-TEXAS -Number of workers· (i n lOOO's) _ All f1ulnufacturing industries .. . Food and kiudred products ... . Products or petroleum and coal. Lumber and timber basic products ......... . Printing, publi.shing, a.nd allied industrie8 .... . Apparel ... ...... ,.,., ....•... ~1achinery (except e1cctrica1) , .. Cbemica1s and allied produeta ... Furniture and finished lumber products . . Textile mill product:> tlnd other fiber manufactures. !tOil, steel and their products .. Paper and paper products ..... .. . . . ............ . SLone, clay and glass products , ........... . Transportation equipment. (except automobilea) .. . Nonferrous metals and their products ........... . All others ..... .... , .......... , ....... , Prewar War-peak June HI46 166 .7 39.2 25.3 18.3 12.5 11.8 442.7 59.1 33.0 26 .5 13.9 11.9 28 .5 20.5 303.3 59.1 38.7 27 .0 17.5 22.0 29 .5 11.5 11.7 11.2 8.2 29.1 3.5 6.0 158.9 11.9 8.3 8.7 16.5 3.8 0.7 22.1 9.4 10 .5 9.1 8.8 7.5 6.5 2.2 6.4 1.6 .8 5.8 22. 1 or ·"Prewar"-employmeot as 16th Census of Manufactures, October 1939. "War-peak"-employmeuL during November 104.3, the peak of manufacturing employment n Texas, us reported by the Bureau of labor Statistics. "June 1946" is estimated on basis of percentage deviation from May 1946 in selected firms. Construction activity and oil production are also being maintained at much higher levels than before the war. During May 1946, the value of all construction contract awards totaled $82,983,000 in Texas and $85,298,000 in {he Eleventh District, increases of 480 per cent and 456 per cent, respectively, as compared with May 1940. Comparisons based on dollar valua{ions of contract awards are distorted by the large increase in construction costs since 1940. Even after this distortion is MONTHLY BUSINESS REVIEW 108 taken into accoun~, it is apparent that, although the total volume is considerably smaller than at the peak reached during the summer and fall of 1942, much more construction activity is now going on than before the war. Petroleum production has greatly exceeded all anticipations for the first postwar year. Instead of dropping precipitously after the termination of hostilities, as had been generally expected, the demand for petroleum products declined only slightly, and since the beginning of 1946 has increased steadily, creating an urgent need for expanded production f rom fields in this district . Production of crude oil in the Eleventh District averaged 2,425,427 batrels daily during June 1946, as compared with 2,395,866 barrels daily at the previous production peak in August 1945 and 1,496,720 barrels dai ly in June 1939. Drilling activity in the district, as measured by well completions, has not regained the level of the years immediately preceding the war, but has been accelerated since the end of hostilities, and is currently 170 per cent above the low point to which it dropped in March 1943. COTTONSEED AND COTTONSEED PRODUCTS T. .... Cottonseed receh'ed [J.t mills (ton.s) ....... . . . . . ......... Cottonseed crushed (tons) ..... CottolUeed on hand June 30 (to..) ..... (June 1940 equals ]00) - -T."",- _ - District - _United State8June ~on·:igricultur9.1 emllloymcut·t . . .. Manufacturing employmcn tt.. . .. Crude oil production....... . ... . Crude oil rUD S to stiJls4 . ... . ......... . Drilling activity§ (well completions). . . . 11'145 141 182 171 130 68 68 Latest month 135 162 176 130 78 Juue Latest )945 month 135t 1281 172t 149 156 un 130 127 68 79 61 144 40 J 00 71 126 7go gge 98 132 101 102 June 1945 119 149 131 136 70 70 Latest month 117 128 133 133 76 249 246 Ul 120 97 96 Value of conslmction oontrnct.nwards§.. 144 Residential . . . . 194 31 AU other . . ...... . .... 79 124 98 Lumber production ~ ... . . 67 77 111 Cement product ion6 ..... 98 132 65 Cotton spindles in place~ ~ . 101 102 93 Hours of operation. 89 95 89 95 102 04 Cottonseed crushed §.. . 374 45 N.A. N.A. 241 05 Freight car landings§. N.A. N.A. 165" 152" 120 118 • Proprietors, sel£ employed, domestic servunts and armed forces excluded. t Latest monthMarch. 1946. tFivc states: Ariwna, Louisiana, New Mexico, Oklahoma a nd 'rex1U:!. t1.8t.e:rt. mont h- June H146. - Latest month- Mny 1046. 61940 average equal.! 100. 6Fh'e st.a.tet! and Arkansas. "Southwestern district. ""Lute~ t month- April 1946. .u which developed 1ll this district early in 1946 and continued despite the rigid limitations of March 26, governing the type of project for which authorizations would be granted, bas been slowed by imposition of the Civilian Production Administration order of May 29 sharply restricting nonresidential building for 45 days. The order, which is designed to conserve scarce building materials for use in residential construction, has been extended for an unstated period beyond July 15. In the petroleum industty, acceleration of drilling is being retarded by sbortages of pipe and other oil field equipment and by lack of trained workmen. Shortages of pipe and skilled labor also limit the speed with which pipe lines now being constructed or planned can be brought into operation. Until additional pipe-line faci lities are available, expansion of crude oil production in the district, which will be necessary if forecast increases in the demand for petroleum products materialize, apparently cannot be accomplisbed witbout producing above maximum levels of efficiency in the East Texas and coastal fields. 208,983 320,751 161,574. 21 8,8.12 277.769 30 : Crude oil (thousand lbs.) . . . Cake a nd meal (tons) ... ... Hulls (tona) .. . ........ . Linters (running bales) ... 3,102,287 3,218,839 4,310,510 4.137,353 100,230 284,013 1.003.129 1.28.1.745 1.899,7<7 957.652 1.211 ,576 428,511 1,415,270 209 .004 273 .234 77:1.297 975.372 3.743 15.894 17.014 6,538 8,326 40,314 33.326 48,704 ~tocks on ha nd June 471 8.041 3,096 6,994 14,626 71,488 M,I04 31,M5 SOURCE: United States Bureau of Census. DOMESTIC CONSUMPTION A..'lD STOCKS OF COTTON-{Ba1ca) June June 1946 16.559 792.551 1945 16,146 786,063 U.S.ltocu--end of month: In consuming estabm'~ . . . 2,280,942 Public stg. & compresses . . 6,381,566 2,036,556 9,1 92.041 Consumption at: T e.J.a5 mills . . . . . ...... . . . United States mills .. . ... . Rapid expansion of activity above present levels is prevented in many industries in this district at this time by continuin; scarcities of vital materials and developing shortages of skilled labor. The boom in commercial and industrial construction MEASURES OF INDUSTRIAL ACTIVITY: PREWAR, YEAR AGO, AND RECENT MONTII S 118,832 11.627 Production of prod ucts: Crude oil (thous...md 100.). Cake and meal (tOlll!l) .. Hulls (tons) .. . . .... I..inter8 (running bales) ... • Unitcd States-- AU.I(Ust 1 to June 30 Last seaaon This SCllSOU August 1 to June 30 This season Last. season 620,1 69 943.125 905,1 89 692,141 May '946 18,783 871,559 August 1 to Juno 30 This srnt.801\ Last season 182,638 8,436,102 174,506 8,902,742 CRUDE OIL PRODUCTIO:l-(Barrels) Increase or decrease in daily average production from Juue 1946 Daily avg. production 250,982 T ntal production 7.529.450 17.997,350 14,359.800 11.1118,850 16.334.800 North Texas .... . ... . West Texas ......... East Teus .... . .. .... Southwest Texaa .. . . . ... . . . .. Texas Coastal . ...... . . . ...... Total Teus. New Mexico. North Louisiana .·...... Total District .. June 1945 599,912 478,660 372 ,295 544,493 67,390.250 2.926.250 2.446.350 2,246,342 72,762.850 2.425,429 97,542 81,545 May 1946 3,182 78,812 49,740 '0,795 58,403 + 6,382 +102,512 - 38,873 + 14,732 - 18.574 + + + + -+ + 66,179 6.230 12,322 +'3',b42 + 1,779 + 1,532 + 72,271 + 134.853 SOURCE : Estimated from American Petroleum Institute weekly reporta. • The American Petroleum Institute ha.! abandoned i~ reporting dilltricts in Favor of those of the Teus Railroad Commission, consequently June data are not exactly comparable with previous periods. BUILDING PERMITS June 1946 No. Abilene . ..... Amarillo .... . Austin .. .... ..... Beaumont ... _. . .. ~r:~~t~ :::: El Pa&O ... . ...... Fort Worth .... . .. Oalve8oon . HOullton ......... . Lubbock ..... . . . . Port Arthur .. . ... San Antonio .. . . . . Shreveport. La•.. . Waoo .•.......•.. Wichita Falls . . . . . 93 176 322 27. 246 958 77 483 133 554 160 146 1,162 294 139 77 V.lllation 304.813 451.MO 1.326.123 21 7,505 1,084,897 2,638.248 216.80' 1,564.,919 200.057 2.404 .807 3,776,809 261,920 1,74 8.291 44 7,551 .04.896 163.000 - - - -T...1. . . . . . 5,29' 117,202,440 Percentage change Percentage valuation from Jan .l to JuDc 29, 1046 ebaD~e VallJa.t10D No. Valuation from 194:S June 1945 May 1946 + 69 + 393 - 47 +229 + 87 + 72 +217 + 75 - 12 + 69 585 1 2,804,9110 4,420,.;75 1,298 2.3M 9.379.'58 1,445 1,705,158 6.249.925 1.5S9 7,3i6 26.653.378 531 2.439.361 3.817 14.9'1.947 695 1.158.660 4.216 39.069.439 ij,OM.473 1.137 1.062 1.301.614 7.534 14,298,983 1,940 5.334 ,438 831 2.222.105 1.143.362 433 +301 +761 +94 +221 +513 +435 +379 +168 +18. +479 +419 +442 +386 +186 +286 6 36,913 1138,1118,866 +318 + 40 - 34 -12 + 2 + 100 + 3 - 76 - 44 . + 132 +13~ - -H85 H18 + 188 H 80 + 187 + 136 + 16 - 44 + 211 + 32 ·Over 1,000 per cent. VALUE OF CON STRUCTION CONTRACTS AWARDED (Thousands of tloi.lar3) 19. 6 June 1945 1 64.653 20.419 34.234 1 25.715 4.368 21.437 1ltLy 1946 S 85,298 51,311 33,987 80 7,914 332.2'8 475,666 227.298 41.779 18.1,619 952,418 463,600 488,818 June Eleventh District-total.. . R esidential . .. All ot her . United States· -total. . Residential All other ... . . . "37 lltates east of t he Rocky Mountains. EOtRCE : F . W. D odge CorptJration. January 1 to June 30 1946 343,328 155,019 188,309 19.5 S 139,224 16,029 3,937.736 1,633,,73 2,304,263 1,482,399 197,509 1,284,800 123, 195 . MONTHLY BUSINESS REVIEW AUGUST 1, 1946 NATIONAL SUMMARY OF BUSINESS CONDITIONS (ComDiled b,. the Board of Governors of the Federal Reserve System) ." INDUSTRIAL PROCUCTION 260 " ,..-- ' ~It;,\L-"'-.l-..l. .. , ,,i,, rI( l'i.:i 0 200 r-c - 0 Vl - ", I or .),I,.,u ..... 1-- "° j ,~ JQT... ,00 • lAA/ilIPOllTATlON 0v~ eo' ~ [t- ~r tJ , 20 -~ ,/ 1 fO I EI I' i ~,,+: l~ l '" Federal Reserve index . Groups arc expressed in terms of points in tb e total index. Monthly figures. latest shown are for J uoe 1946. EMPL.OYMENT IN NONAGRICULTURAL ESTABLISHMENTS IJJ.. --I Y' 1 R\' " .J :./ p:: " -f-- C- J ° i'-I\ , V ,/ , ---,,,,, ~~ ,,, :';:;;" lI.Ql I _L I 1IOYl~1."UT ' "0 WHOLESALE PRICES ........ ~ 1 110 .. '1II!.' Cf. ' , " L, ~,/ '" '" ~ ' ........ 1 V 1 I I ALLtO"'IrOOlTIU I 1 J, 10 OTIII~· ~~ k " ~--k:7 ~'l- . 1939 liMO 70 OUtput of d urable manufactures increased about 10 pe r cent in June, reflecting chiefly the recovery of iron and steel output f roro the sharply r educed May rate. Steel mill activity adv anced from 44 per cent of capacity at the end of May to 87 per cent of capacity at the end of June and in July ro::e somewhat further to a rate of 89 per cent during the currem week. Output of nonferrous metals and of machinery showed moderate gain s in June, largely reflecting settlement of wage disputes in these indust r ies, .lOd producti on of stone, clay an d glass product s recovered f rom the low May level. Lumber production showed abou t the usual seasona l increase . Output of nondurable goods as a g roup sh owed lit tle change from May to June, with a further decline in manufactured food output otf ~ et in the totd by moderate gains in most other lines. Meat production under Federal inspeclion dropped fun her in June t o a rate about 80 per ce nt of the 19H39 average, but rose sharply after the lapse of price controls on June 30. Output at textile mills continu ed t o adv ance slightly in June and was at a level [0 per cent above a yea r ago. There were sligh t gains in activity in t he p aper, ch emical, petroleum and rubber prod uct s industries. Value of construction contract aw ards, acc ording to the F. \X'. Dodge Corporation, declined in June, follow ing a sharp rise during the past yea r. Residential awa rds were reduced by one-fourth from the record level reached in May, while those fo r nonresidentia l construction showed only slight decline. EMPLOYMENT Employme nt .ill nonagricultural establishments cont inued t o advance in Jun e, after allowance for seasonal changes, reflecting large i ncrcas~ s in mining and construction and a slig ht gain in manufactu ring. The n umber of persons unemployed, other than students looking for summ er jobs, showed little change from May co June. DISTRIBUTION D epartment store sales in June , lfter allowance f or scasona l changcs, were the largest on record , and in the first half of July sales showed about the usual seasonal decline. Loadings of railroad revenue freight increased sharpl)' in June, follow ing in terruptio ns to shipments in Apr il and M aya s a res ult of industrial disputes . A ll classes of freig ht sha red ill the rise. After a tcmporary decline in t h e week of July 4, there was a furthe r rise and in th e middle of the month coal, livestock, fo rest products, and less than carl oad lot sh ipme nts exceeded those during the same COMMODITY PRICES Pr ices of farm products and foods adv:mced sharp ly during the fi rst half of July after tpe lapse Bureau of Labor Statistics' indexes. Weekly figures, latest eu ow n :l re for week ending July 20, 1946. of Federal p rice controls. Subsequentl y p rices of graim and some foods declined somewhat while prices of liv est ock advanced furth er. Prices of hides. cotton goods, newsprint, lu m ber, lead and zinc also incr~ased in Jul y. ." MEMBER BANk RESERVES AND RELATED ITEMS .. - . 0 ' ............ BANK CREDIT p.U'''.O'IHa.U ~~~ " " CIII!; U~TIO'" " " INDUSTRIAL PRODUCTION Th e Board's seasonally ad justed index of industrial produclion rose f rom 159 per cent of the 1935-39 aver age in May co 170 in JW1e. This comp ares with ead ier postwar highs of 168 in November and in March. Most of the increase from May to Ju ne rcflected sharp advances in output of coal and per iod !.ast ye:lr. ._-- - IMI further rise. =NSTRUCTION Bureau of Labor Statisti cs' estimates, adjusted for seasona l variation by Federal Reserve. " O rner" includes transportation, public utilities, finance, service and mIScellaneous. ProprielOrs and domestic workers excluded. L:uest month shown is June 1946. ... SOme Minerals output rose 2} per cent as coa l and metals produ ction showed sharp ga ins with the settlement of wage disputes, and crude petrol eum production advanced f u rther to :1 new record rate un der t h e pressure of exceptionally large demand for petroleum products. . . : =- f--j I I I b-i"" ~ II I " -, ......_ 01' ,( -~~ and prices of industrial commodities showed of iron and steel after settlement of the coal strike. fO '00 \\:Tith settlemen t o f major industrial disputes , output at factories and mines increased sharpl y in Junc. Retail trade was in exception ally large volume in June and the carly part of July. Prices of agricultural commodi ties rose sh arply in th e first half of July following the lapse of Federal cont rols, 60 ~~~! ~ IV? / 1 n..-r, ,. ~ r- -lJ,~Ll ~ , r- - r- / ·u.""" GOI.D /' /' V ..,.. .... " =/ .-/ ,---- 1940 ,- /J r" ...- /)}; I /, ..... j' J:.. &. ,IV , III! W!!1t 'ANI( , s- - ~~ -IIAN'I 'T "~"" - - -~t-- -,1939 ~C't>( ~ f--' , M= AEKltVE TItUSUltTOEPOsm /9041 \'X'ednesday figures. latest shown are for July 17. 1946. Treasu ry operations in connection with retirement of maturing obligations and quarterly income (ax coll ections domin ated bank d evelopments in Ju ne and the first h alf of July. M ember bank reserve positions fluctuated somewh at as Treasury balances at the Reserve Banks were built up and drawn down around the security redemption dat ~ of June I, June 15 , and Ju ly 1. R eserve posit ions tig htened generall y duri ng the period as a whole, however, reflecting both t he shift of deposits fr om Treasury balances to pr iv ate aCCounts accompanyi ng security retirement and ca sh redemp t ion of about 800 million dollars of Gover nment securities held by the R ese rve Banks. Drains on bank reserves were met by purchases of abou t 1 billion dollars of Government securities by the Reserve System . Holdings of Government securities at reporting b:mks decli ned further by 3 billion dollars in June and the first half of july, refl ecting the sale of these securit ies to the R eserve Banks as well as cas h redemption by the Treas ury. Loans f or purchasing and ca r rying Go vernment securities showed further declines. Comme rc ial and i nd ust r i~1 loa ns expanded considerab ly at banks ours id e New York City and real estate and ot her loans continued to increase.