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business • revIew december 1966 FEDERA lL RESERVE BANK Of" DALLAS This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) contents socioeconomic profile of houston area residents . .......... . . .. . . ..... . 3 southwestern agriculture in 1966 ................ . ........ . ...... . .. . 9 petroleum trends in 1966 ..... . ............ . . . 12 district highlights . .. . ... . .. . ...... . .. . .. . ... , 16 socioeconomic profile of houston a,-ea ,-esidents Houston needs manpower for its industries, stevedores for its port, and scientists to help send men to the moon. Houston is well known as a refining and petrochemical center, a major port city, the location of NASA, and the site of the Astrodome - an architectural masterpiece. The city is considered a good place to live and a good place to work. What type of people live in Houston? The 1960 population of the Houston standard metropolitan statistical area - including residents in the counties added when the area Was redefined in 1965 1 - totaled 1,418,323, ranking the area 16th among all SMSA's in the Nation. Between 1950 and 1960, the area's population had increased 51.6 percent, or at an average annual rate of 5.16 percent. Net civilian migration between those years added 235,405 new persons to the total population. The U.S. Bureau of the Census estimates that the Houston SMSA population increased another 277,000 persons, or 19.5 percent (an average rate of 3.9 percent annualJy), between 1960 and mid-1965 to reach a total of 1,695,000. Data on net migration are not available for the entire period between 1960 and mid-1965, but the Bureau of the Census has estimated the aggregate net migration for the Houston area between 1960 and mid-1964. Based upon the assumption that the proportion of net migrants - 1 Only Harris County was included in the 1960 area definition; but in 1965 the Houston SMSA was redefined to include Brazoria, Fort Bend, Liberty, and ~ontgomery Counties. The addition of these counties IDcreases the 1960 Houston SMSA population by 175,165. to the total population increase remained the same between 1964 and mid-1965, net migration is estimated to have contributed about 49 percent - approximately 135,000 personsto the total population increase in the Houston SMSA during the period from 1960 to mid-1965. Expanding economic activity in the Houston area has provided good employment opportunities for both old and new residents. With the decrease of the unemployment rate from 4.5 percent in 1960 to 2.9 percent in July 1966, Houston attained one of the lower unemployment rates among the 150 major U.S. labor market areas. In only 27 of the other major labor market areas was the unemployment rate lower than in Houston. According to the U.S. Department of Labor, as of January 1966, almost 86 percent of the job openings for workers in professional, technical, and managerial occupations in the area had been unfilled for 30 days or more. The proportion of unfilled positions for such occupations was more than double that for all occupations. The high percentage of job openings unfilled for 30 days or more indicates a definite shortage of persons with the necessary skills. The following discussion provides a profile of certain significant population and employ- This is the second of a series of articles discussing selected population and employment characteristics of various metropolitan areas in the Eleventh Federal Reserve District for which the necessary data are available. business review / december 1966 3 the increase in the proportion of the population in the 5- to 14-year age group. The growing importance of this particular age group contrasted with the substantially reduced importance of the 25- to 44-year age group. The other age groups experienced minor changes in relative importance. ment characteristics for the Houston SMSA, based upon census data for the 1950-60 period. Comparable data detailing the socioeconomic composition of migrants are not available for the years since 1960; consequently, it is not possible to determine if migration patterns evident during the decade of the 1950's have persisted into the 1960's. Data on population growth and employment through the midsixties suggest that the Houston area has remained a sufficiently attractive labor market to retain its residents and to attract additional out-of-area job seekers. Nearly 16 percent of the 1960 residents in the 5-14 age group can be attributed to net in-migration during the 1950-60 period. In the Houston area, as in other economic and geographical areas in the Nation experiencing a significant net in-migration of population, the 5- to 14-year age group showed large numerical and relative increases. These increases reflect the very high birth rates which occurred after World War II. Net migration of youngsters in this age bracket is, of course, dependent upon the migration of their parents. age composition Between 1950 and 1960, the population of the Houston area became relatively younger. During this period, the median age for females declined from 28.5 years to 27.3 years, and for males it declined from 29.0 years to 27.0 years. Thus, although the median age in 1950 was slightly lower for females than for males, the reverse was true by 1960. In the case of both males and females, one of the more prominent shifts occurring between 1950 and 1960 was The relative importance of net migration to the age composition of the resident popUlation during 1955-60 is indicated in data provided by a special survey conducted by the Census Bureau on migration to and from selected 1955·60 IN·MIGRANTS AS PROPORTION OF 1960 RESIDENT POPULATION, BY SEX AND AGE GROUP HOUSTON STANDAR D METROPOLITAN STATI STI CAL AREA MALES AGE ~ L.: 10 To 14 Yea rs ""i};,q r 15 To 19 Yea rs """,,,,' 4, +5 I ~ .,~I 30 To 34 Yea rs ~ 35 To 44 Yea rs p G 45 To 54 Years ~ 65 And Over SOUHCE: u.s. Bureau ul the Census. p 25 To 29 Yea rs 55 To 64 Yea rs +10 ~ 20 To 24 Yea rs icc: I +15 FEMALES I 5 To 9 Years o - 5 p p 0 +5 PERCENT OF 1960 PO PULATION TOTAL FOR AGE GROUP, BY SEX +10 +15 - +20 SMSA's. The data show that 13 percent of the 1960 population in the 20-24 age group was not living in the Houston area (which included only Harris County at the time of this survey) prior to 1955. In the case of the 25-29 age group, 9.7 percent was not residing in the area. A particularly striking development revealed · by the census data was the net out-migration although relatively small in magnitude - displayed by the male 15-19 age group as contrasted with the in-migration of other young age groups. The net effect of the migration pattern Was to increase the youthfulness of the area's population by reducing the median age of the residents 5 years or more of age to 31.4 years from the 31. 7 years it would have been withou t migration. The 15-19 age group's net out-migration of 1,577 males - which resulted from two opposite flows, a net out-movement of 1,842 whites and a net in-movement of 265 nonwhites - is not readily explicable, although some presumptions concerning the reasons for this exceptional phenomenon might be advanced. One is that, as of 1960, the University of Houston was not a fully State-supported institution of higher learning. This fact might have induced some students to seek a college education in Statesupported institutions located elsewhere. It is also quite possible that many of the teen-agers were of post-high school age and Were relatively new entrants in the labor market; and better job opportunities at this particUlar time may have been more readily available elsewhere. In 1960, for example, the unemployment rate for males in the 15-19 age group was 11 percent, compared with a crude estimate of 15 percent if no migration had occurred. (This estimate assumes that participation in the labor force would have been proportionately the same for those 15- to 19-year-old males in Houston during 1960 and for the 1955-60 out-migrants in the age group had they remained residents.) The comparable 1960 unemployment rates for THE CHANGING AGE STRUCTURE BETWEEN 1950 AND 1960 HOUSTO N SMSA AGE IFEMALES MAtES Under 5 Yea rs r 3/ I I 5 To 14 Yea rs I .'1 r 15 To 24 Yea rs I I L 25 To 44 Years r It I J r 45 To 64 Yea rs I B 65 And Over 1950 E 40 30 20 10 0 1960 10 20 30 40 PERCENT OF POP ULATI ON TOTAL FOR EACH SEX SOUR c r : u.s. Bureau ot the Cen sus, male residents in this age group were 12 percent for all urban areas in the State and 8 percent for Dallas. Thus, the net out-migration from Houston by young males may have been stimulated, in part, by the existence of better employment opportunities in other growing labor market areas. The overall rate of net in-migration for Houston between 1955 and 1960 was somewhat low. The rate was pronounced in only one group for each sex, indicating considerable age selectivity in employment opportunities for in-migrants. Male migrants comprised a relatively substantial part - nearly 12 percentof the 1960 male residents within the 25-29 age group. Female migrants composed about 15 percent of the 20-24 age group for female residents - a somewhat larger proportion than that for any of the other female age groups. During the 1950-60 period, the net gain to Harris County from civilian in-migration was business review / december 1966 5 EMPLOYMENT IN MANUFACTURING Houston Standard Metropolitan Statisti cal Area l It em Employm ent (In thousa nds): Tota l m anufacturing Durable manufa cturing . Nondurabl e manufa cturing . Employm ent ch a nge from previous year (Percent): Tota l manufacturing .. . .. . . . . . . . . .. . .. Dura bl e manufacturing ........ No n durable man ufacturing . . . . , , , . . . . . 1958 1959 1960 1961 1962 1963 1964 1965 103.0 4 8 .9 54. 1 103.3 50.5 52.8 104.0 50 .2 53 .8 103.6 50.4 53 .2 106.4 52. 6 53.8 106.7 53 .2 53.5 111.3 56.5 54.8 116.0 60 .4 55 .6 n.a . n.a. n.a. .3 3.3 - 2.4 .7 - .6 1.9 -.4 .4 2.7 4.4 -1.1 1.1 .3 1.1 -. 6 4.3 6.2 2 .4 4.2 6.9 1.5 1965 SMSA d efinition . n. a. - Not availab le. SOURCE: U.S. Depa rtment of Labor. 1 220,731, of which only about 16 percent took place in the latter part of the decade. The lessening of the in-migration ensued from the general economic recession of 1957-58 and, in particular, the employment reduction in the petroleum industry arising from (1) the abrupt decline in output associated with the end of the Suez crisis in 1957 and (2) the very substantial increase in output per man-hour eventuating from the sizable investment boom which culminated in 1957. A consequence of the modernization coming out of that investment boom was reduced labor requirements, especially for production workers. old and over is higher than the 10.9 years for the combined population in all urban areas in Texas. The proportion of Houston's population having 12 years or more of education43 percent - was about the same as that for the State's total urban popUlation. M ed ia n schoo l years comp leted 10.5 As suggested by data on employment in manufacturing industries, the Houston area did not manifest renewed strength in employment until 1962. Total manufacturing employment had exhibited a sidewise drift from 1958 through 1961, being depressed by adverse conditions in fabricated metal products, chemical, and petroleum industries. By 1964, however, manufacturing employment began to rise vigorously ; and the area's population, as of July 1965, was growing at an average rate of 3.6 percent (compounded annually), compared with 3.4 percen t during 1960-64. Un der 8 yea rs . 8 y ea rs 9 to 11 y ears .. . 12 ye a rs . . ...... . 13 t o 15 y ears . 16 yea rs or more . 98.3 97.8 98.1 96.8 95.6 92.7 educational characteristics Houston's residents are comparatively well educated. The 11.1 median years of schooling completed, as of 1960, by both sexes 14 years COMPARATIVE IMPORTANCE OF 1960 RESIDENTS 25 YEARS OLD AND OVER, BY EDUCATIONAL LEVELS Houston SMSA Yea rs of sc hoo l comp leted Perce nt ag e in educ atio na l level _ Nonmigra nts In .mi g ra n ~ 12.7 1.7 2.2 . 1.9 3.2 4.4 7.3 ' 1955·60 . SOU RCE: U.S. Bu re au of t he Censu s. In-migration produced a noticeable improvement in the area's educational level. In 1960 the median years of school completed by the migrant population 25 years old and over was 12.7 years, compared with 10.5 years for nonmigrants. Further, the proportion of the 1960 resident popUlation accounted for by inmigrants was higher for those with 12 years or more of education than for those with less than 12 years. It was distinctly higher for those completing 16 years or more of schooling. Since 1960, the professional and technical requisites accompanying the evolution of the NASA space complex have very likely engendered a considerable further increase in the educational level of in-migrants. employment shifts among the various occupations, ensuing from both a shift in the Houston area's industrial structure and a change in the occupational needs within its industries. Between 1950 and 1960, there was a strong shift in male employment toward professional and technical workers - a development which is in keeping with the existence of capitaJintensive and technologically oriented industries in the Houston area. The occupations in which employment was considerably smaller than expected were laborers and craftsmen. The weak showing made in the employment of laborers provides a bleak outlook for the unskilled worker. Similarly, the sllift in female employment was toward professional and, in particular, clerical occupations. Clerical positions substantially exceeded other occupations as a source of employment for women. occupational structure Occupations derive their relative importance from not only the industry mix in a Jabor market but also the mix of occupational employment within the various industries. Thus, both the shifting character of employment within each industry and the structural changes among the industries influence changes in the occupational composition of employment. The accompanying table indicates the number of people employed in the Houston SMSA in 1950 and 1960, classified by both occupation and sex, together with the differences between the actual 1960 employment and the employment that would have been expected if employment in each occupation had grown at the same rate between the 2 years as did total employment. The table shows the effect of As a result of these shifts, the aggregate income level of the labor force improved. This would have been the case whether or not income levels within the occupations had risen, because the occupations into which people SHIFTING IMPORTANCE OF SELECTED NONFARM OCCUPATIONS Houston Standard Metropolita n Statistical Area - MALE EMPLOYMENT FEMALE EMPLOYMENT 1960 1960 Occupation Professional, technical, and kindred workers . Managers, officials, and proprietors .. Clerical and kindred workers Sa les worke'r~ ' .......... Craftsmen, foremen, and kindred workers ..... Operatives and kindred workers Private hou~~h~r'd' . Workers Serv!ce work~~~, ~~~~~t' .. Private household ... Laborers, except mine . TOTAL -b J. 1950 actua l Actual Differential shift Expected! Negative Positive 22,420 39,156 29,390 31,051 39,330 40,703 17,796 18,024 23,664 25,230 23,328 23,627 52,092 63,545 68,285 43,104 58,168 56,505 9,766 1,373 336 1,603 4,740 1,663 Differenti a l shift Expected' Negative Positive 1950 actual Actual 10,928 19,828 16,522 5,049 6,147 7,633 1,486 29,950 8.442 51,508 11,618 45,280 12,763 1,145 1,308 1,593 1,977 384 8,657 9,701 13,088 3,387 3,306 6,228 571 593 748 155 13,591 17,103 20,548 3,445 15,909 24,333 20,433 25,218 20,854 31,897 421 6,679 14,135 576 21,809 745 21,370 871 126 225,300 295,337 295,337 13,368 92,636 140,052 140,052 9,973 13,368 439 9,973 The number that wou ld have been employed in 1960 if employment in the occupation had shown the same rate of change e~'Oeen 1950 and 1960 as tota l employment for all the occupations. URCE: U.S. Bureau of the Census. business review / december 1966 7 the migration component of each of these categories was related to the differenti al employment shifts among these categories. 1955·60 MALE IN·MIGRANTS AS PROPORTION OF 1960 MALE EMPLOYMENT, BY NONFARM OCCUPATIONAL GROUP HOUSTON SMSA summary OCC UPATION Professiona ls, Tec hnicians l moved required more training and skill and, consequently, paid higher wages. After an apparently slight hesitation in its expansion between 1957 and 1961, the Houston area appears to be reaffirming the dynamic growth qu alities it had displayed prior to 1957. The area's growth has been especially strong since 1964. With an increasingly young and (compared with residents in the State as a whole) well-educated population, the Houston area possesses an asset favorable to its continued advance. Houston seems to be in an excellent position to continue attracting young and well-educated workers. Much of its industrial base is technically oriented; its port will provide the opportunity for the city to become an expanding domestic and foreign trade center; and the location of NASA at Houston will generate both direct and indirect employment opportunities. Except in the case of the unskilled, increasing employment opportunities have utilized a broad range of the abili ties and skills of both old and new residents. The proportion of male in-migrants during 1955-60 to the total 1960 male employment in occupational groups can be derived from special census data. Similar data for female in-migrants are not available. In the Houston SMSA, male in-migrants were prominent in four broad occupational categories. These were professional, technical, and kindred workers; clerical and kindred workers; sales workers; and operatives and kindred workers. A considerable part of These characteristics combine to provid e a favorable labor market for continuous expansion of a wide variety of business and industrial concerns in the Houston SMSA. Such a favorable labor market is indicated by the fact th at manufacturing employment in the area increased from 104,000 in 196.0 to 122,100 in July 1966 - or 17.4 percent. C. HOWARD D AVIS Industrial Economist t=J Managers, Officia ls Clerica l Workers I Sa les Workers Craftsmen, Foremen I l Opera tives Service Workers l Labore rs I I Not Reported o 5 10 15 PER CENT OF TOTAL 1960 MALE EMPLOYMENT IN GR OUP SOUACE; U.S. OUfC\1U of the Census. new pa..- bank 8 The Texas State Bank, Joaquin , Texas, an insured nonmember bank located in the territory served by the Houston Branch of the F ederal Reserve Bank of Dallas, was added to the Par List on November 10, 1966. T he offi cers are: C. Webb Dean, President; J. H. Black, Vice President; Walter C. Rainbolt, Vice President and Cashier; and Mrs. Dorothy Graves, Ass istant Cashier. southwestel-n agl-icultul-e inl966 Production of agricultural commodities in the five southwestern states this year is at a high level but will be moderately less than last year's bountiful harvest, which set an aU-time record. The output of crops is estimated to be 13 percent below that in 1965. A large part of this decline is accounted for by the reduction in cotton output, resulting from participation of growers in the Government cotton program. In contrast to crop output, livestock production is likely to be 6 percent larger than the 1965 total. The high level of agricultural output, relatively favorable farm product prices, and sigllificantly larger Government payments are expected to boost gross income above the $4.8 bi ll ion mark reached last year. diverting up to 35 percent. The 1966 acreage for harvest is more than one-fourth below that of last year. The crop will be materially smaller, mainly because of the reduced acreage; in addition, yields are expected to be slightly lower. The basic support price for Middling grade linch staple-length cotton lint was set at 21 cents per pound for the 1966 crop, as contrasted to 29 cents per pound for the 1965 production. However, two direct payments were made to farmers to help offset the reduction in the basic support price and maintain income of cotton producers near that in 1965. CROP PRODUCTION in the Southwest is largely dependent upon the performance of four major crops - cotton, sorghum grain, wheat, and rice. These crops account for the overwhelming proportion of p lanted acreage, as well as cash receipts from the sale of crops. In addition to the impact of differential growing conditions, an important influence upon production of the four crops is Government programs. Changes in these programs have had a noticeable effect on cotton and rice output this year. Production of sorghum grain, the basic feed grain of the Southwest, has shown a substantial increase, rising 14 percent above last year's outturn. The acreage planted to the crop was 8 percent greater than a "year earlier, and timely rains have resulted in record yields. The outturns of other feed grains - barley, corn, and oats - are below last year's levels as the result of poor growing conditions and acreage reductions, but the exceptional grain sorghum crop will boost total feed grain production 10 percent above that in 1965. Consequently, sorghum grain is expected to account for 82 percent of the total feed grain supply in the region in 1966. Cotton production in Arizona, Louisiana, New Mexico, Oklahoma, and Texas is expected to total 4.8 million bales, or 27 percent below the 1965 output. In order to participate in the 1966 cotton program, farmers were required to divert a minimum of 12.5 percent of their acreage aUotment, but they had the option of A shortage of soil moisture in the major wheat-producing areas of the Southwest during the winter and spring months resulted in a crop smaller than the bountiful 1965 harvest. Louisiana was the only southwestern state to show an improved output. Oklahoma - the major producer of wheat in the Southwest - har- business review / december 1966 9 vested a crop considerably below that of a year ago. In contrast to wheat output, rice production was 5 percent above a year earlier, due entirely to an increase in acreage. Rice acreage allotments have been in effect each year since 1955; and in 1966, growers were permitted to plant additional acreages in order to provide supplies to meet world food demands. The heavy spring rains and below-normal temperatures retarded the development of the crop; furthermore, a large part of the acreage had to be replanted. As a result of these unfavorable growing conditions, the per acre yield of rice failed to exceed that in the previous season for the first time in several years. A sharp increase in the production of citrus fruits and a severe dip in pecan output have highlighted developments in fruit and tree nut production this year. Citrus output in the Lower Valley of Texas continued to rebound from the level to which it dropped in 1962, when trees were severely damaged by freezing weather. Both the larger number of trees and the increasing size of young trees have conA sharp dip in cotton production in the Southwest reduced total crop output • .. I c: I PERCENT CHANGE, 1966' FROM 1965 RICE C OATS P CORN PEANUTS J.I I COTTON I SOR+UM GRAIN II WINTER C W~EAT BARLEY HAY -30 -20 - 10 "Indicated Nove mber ) . SOURCE: U,S. Oepartment 01ASriculturc. 10 o +10 +20 tributed to the uptrend in production. On the strength of the materially larger Texas crop, citrus output in the Southwest is indicated to be 13 percent higher than the 10.8 million boxes in 1965. Peach and pear production also was significantly higher than last year, but the pecan harvest was considerably smaller since the crop was damaged by insect infestations and adverse weather. The LIVESTOCK SITUATION in 1966 has featured favorable prices and the best grazing conditions in several years. Range and pasture grasses responded to improved soil moisture throughout most of the Southwest, and roughage supplies have generally been good. The need for supplemental feeding was reduced, and stock water was adequate throughout the year. In addition, a very good hay crop, equaling the year-earlier output, was harvested in 1966. The large forage supply is a very encouraging factor in the livestock outlook. The greater number of beef cattle on farms and ranches and an increase in the number being fed were major factors in the higher output of livestock in the Southwest during 1966. Encouraged by generally favorable prices, feedlot operators have tended to utilize a greater percentage of their lot capacities. As a result of the increased number of cattle slaughtered and higher average slaughter weights, red meat output advanced over a year ago. The number of cattle and calves slaughtered during the first 9 months of this year was 3 percent larger than in the corresponding 1965 period, and liveweight was 5 percent greater. Although there was virtually no change in the lamb crop, sheep and lamb slaughter rose 3 percent, and poundage increased 7 percent. However, hog slaughter declined. The output of poultry in the Southwest likely will set a new record. Egg production is estimated to be little changed from that in 1965, but turkey and broiler output is expected to be moderately higher. Although Arizona is not a major poultry producer, the increase in the State's egg production has outstripped the gain registered by any other southwestern state. Broiler output each year has consistently exceeded that in the prior year, and 1966 production may be 10 percent above the 1965 total. Wool production in the Southwest advanced 2 percent during 1966, and mohair output increased for the 14th consecutive year. Reversing the downtrend begun in 1962, sheep numbers in the region were 7 percent larger at the beginning of 1966, with all of the southwestern states except Louisiana reporting a larger inventory than a year earlier. Goat numbers in Texas rose 9 percent over the previous year. Milk production in the Southwest is likely to be little changed from a year ago, but output per cow has increased since milk cow numbers declined again this year. Favorable livestock prices have been the principal factor in maintaining the overall level of farm product prices above a year ago, as the aggregate level of crop prices has been slightly lower. The improved prices for livestock and some crops have contributed to the significant advance in cash receipts from farm marketings. Larger Government payments also will raise the gross income of southwestern farmers and ranchers. Total NET FARM INCOME in 1966 is expected to be moderately above that in 1965, and the division of the larger income among the smaller number of farmers will result in a higher average income per farm . Moreover, with land values continuing upward, equities of landOWners have increased. Consequently, the financial position of most fanners and ranchers likely has improved over a year earlier. AGRICULTURAL PROSPECTS for 1967 are bright. Fall seedings of small grains for next year's harvest have been completed, and soil moisture has been adequate thus far. Heavy Major factors in the increased livestock output in the Southwest were the gains in cattle and poultry production • .. I EGGS PERCENT CHANGE, 1966e FROM 1965 P MILK I WOOL MOHAIR I I I BROILERS I TURKEYS I J CAITLE LAMBS o +2 +4 +8 +10 Il-Partlyesllmatcd, SOURC[,S: u,s. DCllarlmcnl 01 AJ;fl cullu re. federal Reserve Bltnkol Dalln. rains during the year have provided ample runoff to replenish stock water; moreover, increased water supplies in reservoirs used for irrigation purposes have reached the best levels in several years. The demand for most agricultural products remains strong. There will be only minor changes in Government programs, and such changes will largely entail an increase in the acreage farmers will be permitted to plant to grain crops. The tight world food situation has been reflected in a strong grain market, and stocks have been reduced to what are considered to be minimum levels. Therefore, additional acreages may be planted in order to increase grain production and replenish supplies. Cotton is the only major southwestern crop in excess supply. A somewhat better balance between cotton stocks and consumption seems likely, however, if domestic consumption and exports continue at high levels next year. J. C. GRADY, JR. Senior Economist (Agriculture) business review / december 1966 11 pet,-oleum t,-ends i" J966 Output in the petroleum industry has been moving to a higher level each succeeding year, and 1966 is no exception. A growing population, rising incomes, and increasing industrial activity - not to mention a continued uptrend in travel via both private automobiles and commercial carriers - have all contributed to an ever-greater demand for petroleum products. Thus, in 1966 the demand for jet fuel and for residual fuel oils (used heavily by utilities and industrial concerns and in ocean transportation) has advanced sharply, and consumption of distillate fuels (used mainly for diesel engines and space heating) has risen further. Gasoline sales surpassed expectations during the summer; and with the higher gasoline prices, the final 1966 profits picture for the oil industry should be enhanced. aged around 5 percent higher than for the same period in 1965, with all the major categories of products sharing in the advance. Despite the airlines strike in the summer, jet fuel consumption rose the largest amount, 8 percent, and residual fuel oil demand was a close second, increasing almost 8 percent. Distillate fuel made a relatively weak gain, but consumption was still 3 percent above the large volume used during the first 9 months of 1965. A particularly significant factor in the rise in total demand for all oils was a 5-percent gain in the consumption of gasoline, the petroleum industry's most important single product. The increased industrial activity associated with the Viet-Nam war and the requirements of the Armed Forces have both contributed to the rise in the demand for petroleum products. During the first three quarters of this year, total DEMAND for petroleum products aver- Like many other products, petroleum bas both seasonal and erratic variations in its demand pattern. Winter weather noticeably increases the demand for distillate fuel oil for heating, and this past winter was no exception. January was unusually cold, and the demand for distillate was over 3 percent higher tban in tbe same period in 1965. Although heating oils usually dominate the rise in the demand for petroleum products during the winter, kerosene and gasoline usage was the pacesetter last winter. The demand for petroleum products during February reached an all-time high of 13.2 million barrels per day. INCREASE IN PETROLEUM DEMAND UNITED STATES I I I I I I ALL OILS JET FUEL DISTILLATE FUEL OIL I I I I GASOLIN E RESIDUAL FUEL OIL o I I 2 I I B U.S. Bureau of Minn. 12 I I 4 PERCE NT INCREASE, JANUARY- SEPTEM BER SQ URCl S: Ame rl e.1n Petroleum In stitute. I 1965 OVER 1964 1966 OVER J 965 6 8 Demand for petroleum products usually is the lowest in May, the span between the end of the heating season and the beginning of summer, with its attendant increase in gasoline sales. During May of this year, however, there was unseasonably cold weather, and the demand for heating oils remained high. As a result, demand for oil products reached a level that was 6 percent higher than in May 1965. CRUDE OIL FLUCTUATIONS UNITED STATES THOUSANDS OF BARRELS DAILY 9,700 I During the summer months, demand for petroleum surged upward. Because of the airlines strike, a large number of vacation trips (made possible by the high level of personal incomes) were taken via automobile this summer. As early as June, the demand for gasoline reached an all-time high of 5.5 million barrels per day and was almost 7 percent more than in the same month last year. Usage of distillate and residual fuels also showed heavy increases during the summer, reflecting the very high level of business activity. Industrial production averaged almost 10 percent higher than during the SUmmer of 1965 . During August, residual fuel experienced the heaviest demand of any August since the Korean War. The airlines strike this past summer will be remembered by many air travelers as a particularly disrupting and inconvenient interlude, but the petroleum industry felt the impact of the strike through a reduction in the sale of aviation fuel. During the first 6 months of this year, the demand for jet fuel was running well above the same period last year. However, in July and August, jet fuel consumption fell almost 4 percent below the level for these 2 months last year. In September, with the airlines strike over, demand for aviation fuels showed a strong percentage rise over the year-earlier figure . Without the interruption of air travel on many of the Nation's major carriers during a large ~ortion of the summer vacation period, the gain 1O consumption of jet fuel would have been Significantly higher than the 8-percent gain that has been achieved thus far this year. September is normally a transitional month for the petroleum industry. After the Labor Day weekend, vacation travel falls off, and the industry switches to the production of heating I 9,500 I I I I I I I I 9,300 I \ , , 9, 100 I I I .: CRUDE OIL RUNS TO REFINERY STILLS 8,900 8,700 MILLIONS OF BARRELS +15 r- I"" + 10 CHANGE IN CRU DE OI L STOCKS r ..... I-. +5 n o L -5 J 1-1- '""" p c UL L l- -10 I - 15 1965 1966 p-Pfcllmin!l fY· c-Eslimated. SOURC£S: American Pel/oleum Inslltutc. u_s. BUlcau 01 Mlne1!o redelal Ruetll!! Dank 01Dallas. oils in anticipation of the coming winter. During September of this year, the demand for distillate oils (made up largely of heating oils) was the lowest in 4 years; however, demand for residual fuels was the highest for any September since 1953. The strong demand for residual, together with the high-level consumption of most other petroleum products, has kept total demand well above a year earlier. The total SUPPLY of all petroleum products was consistently higher during the first 9 months of 1966 than during the same period last year. business review / december 1966 13 Crude oil production, for instance, averaged about 7 percent higher, and crude runs to refinery stills were higher. In the Eleventh Federal Reserve District, the gain in crude oil production paralleled that for the Nation, and the 3.4percent rise in crude runs to stills was only slightly smaller than the national increase. As in the past, some of the expansion in supplies this year has been met by imports. U.S. imports of refined products during the first three quarters of 1966 were approximately 9 percent above the same period last year. In contrast to refined product imports, crude oil importations were around 3 percent smaller. January's large supply of petroleum products was soon overshadowed by February's showing, as both oil imports and domestic production scored further gains; and supplies during the first quarter of the year were at a record level. Texas, Louisiana, and California primarily accounted for the increases in production. Nationally, crude runs to refinery stills set an all-time high in January of 9.4 million barrels per day, a record that was to be broken during the summer. Petroleum inventories began to rise early in the year. In March, stocks increased contraseasonally by 4 million barrels, and the inventory buildup continued through April. Normally, inventories do not increase until the latter part of April. The rise in stocks was centered in crude petroleum, and some concern was shown over the mounting size of crude oil inventories. In contrast, gasoline inventories, which usually reach a seasonal high point toward the end of March, were lower than normal. In the case of other petroleum products, inventories accumulated somewhat during the early summer; but for most products, the changes were seasonal. Beginning in July, the inventory picture did not follow the typical seasonal pattern. Gasoline inventories shrank at a much faster pace 14 PETROLEUM OPERATIONS ELEVENTH FEDERAL RESERVE DISTRICT PRODUCTIO N AND RUNS COMPLETIONS NUM BER OF WELLS THOUSA NDS OF BARR ELS DAILY 3,600 1,600 ,, ,, -",, ., , 3,400 1\ , \ ....... " A,' " \ , 1,400 , ....... - \: "\ I, '\ \ I ... 1 • : , , CRUDE OIL PRODUCTION "" " I: I I 3,000 TOTAL WELL COMPLETiONS , '\\ " 1,200 ,, , , ~ : , 1,000 I 1/ p 800 p-Prellmln. ry. SOURC[S' Amedean Peltoleum Institute. lll< Q!lwGAl.1WJl4l. u.s. Ou ruu 01MInes. r.der.1RtstrveOanko f OaUu. than normally. On the other hand, inventories of jet fuel increased rapidly because of the airlines strike, and distillate stocks also began to accumulate. Crude oil stocks, which had been a concern a short time earlier, began to ease as a result of lower domestic production and reduced foreign imports. By late summer, crude oil stocks continued to decrease, but inventories of refined products rose. Despite the very high demand during the early months of the year, the record supplies of petroleum products undoubtedly worked toward an easing of PRICES for refined petroleum products. In January, there were price reductions for gasoline on the Gulf Coast and for residual fuels in the Middle West, and a reduction occurred in March in the price of heating oil. However, by spring, prices for refined products began to rise; and additional pri~e increases were noted in the late summer 1ll wholesale markets for gasoline, distillate, and kerosene. Crude oil prices have been quite stable during the midsixties. In the 14-month period ended in February 1966, the monthly average price for a barrel of crude was $2.96. The price increased 1 cent per barrel in March and remained unchanged until September, when there was an advance of 2 cents per barrel. The September increase occurred initially in the Middle West, although crude prices in the Southwest were not far behind. Price advances for crude are being attributed to the enlarged demand for gasoline and heating oil. Refineries seemed to be hard pressed in October to find enough crude to meet all demands, and this situation has imparted continued strength to oil prices. Since the 1950's, DRILLING ACTIVITY in the United States has been declining continuously. The year 1966 is no exception because the number of new wells completed, the total footage drilled, and the number of active rigs have all declined. According to American Petroleum Institute data, new wells completed during the first 9 months in 1966 totaled 26,108, or 16 percent fewer than in the similar period last year. In the major producing states of the District-Texas, Louisiana, and New Mexicothe number of new wells completed also dipped sharply. Total footage drilled in the Nation decreased 17 percent, and the number of active rigs eased further. In May, drilling activity began to increase slightly and steadily; but by September, activity had leveled off. Numerous reasons are advanced for the downtrend in drilling activity. A primary factor seems to be the scarcity of new shallow oil deposits, the type that was relatively easy to drill in past decades. Now, drilling often must b.e undertaken at marginal petroleum reserve sltes. Consequently, although crude oil prices remain relatively stable, the drilling of wells is more expensive. Also, attractive alternatives may have slowed investment in exploration and drilling activity. Another factor, of course, has been technological influences. Improved recovery techniques and the wider spacing of wells mean that fewer wells are needed. As in the past several years, the small, independent drilling firms have accounted for most of the drilling decline. On the other hand, the major companies, as a group, have actually increased drilling activity. Their effort has not been sufficient, however, to improve the total domestic drilling picture. Moreover, many of the major producers have been concentrating more heavily on foreign exploration and development. Preliminary data indicate that the PROFIT PROSPECTS of oil companies this year appear relatively favorable. According to The Oil and Gas Journal, profits of the 24 largest firms increased 13 percent during the first 9 months of 1966 as compared with the same period in 1965. If the profits in the final quarter remain at the same level as in the first three quarters, total profits in 1966 will reach a record. The survey indicates that, as a whole, domestic oil companies have shown greater profitability than the large international companies. Increased demand for petroleum products at either the same prices or slightly higher prices primarily accounts for the gain in profits. Nevertheless, other reasons have been cited for higher profits, and these include the benefits now beginning to appear from heavy capital expenditures in recent years and the withdrawal from lines of activity which have shown relatively low profits. The demand for crude oil and refined petroleum products will undoubtedly remain very high throughout the remainder of the year. As a matter of fact, crude oil output in midNovember was the highest for any period. Data are not available showing the demand for major petroleum products for the past month or so, but various statements from industry sources indicate that demand for jet fuel has remained exceptionally high and the calls for heating oils have been strong. At this time, it appears that 1966 will be one of the industry's most favorable years. RAYNAL HAMMEL'FON General Economist business review / december 1966 15 dist,-ict highlights Both the rate of growth and the timing of change in business loans at weekly reporting commercial banks in the Eleventh District varied considerably from the national pattern during most of the year. In the District, business loans grew much less rapidly than in the Nation in the first 8 months of the year. However, since August, there has been a sharp moderation in the growth rate of business loans nationally, and the rate has increased slightly in the Eleventh District. As a result, business loans in the District and the Nation have grown at quite similar rates since the end of August. ally to 147.7 percent of the 1957-59 base but was 8 percent higher than in the same month last year. Durable goods manufacturing rose 1 percent over the previous month, with strength being shown in primary metal industries and fabricated metal products. Stone, clay, and glass products registered a mild output reduction. Nondurable goods manufacturing decreased more than 1 percent, as declines occurred in petroleum refining and related industries and most of the other nondurables categories. However, output of paper and allied products increased somewhat. In the first 8 months of 1966, business loans at the District's weekly reporting banks increased $100 million, or 4.3 percent. In the same period, commercial and industrial loans at the Nation's weekly reporting commercial banks increased $7.7 billion, or 15.2 percent. From August 31 to November 16, business loans in the District rose $56 million, or 2.3 percent. In the Nation, such loans advanced $1.9 billion, or 3.3 percent, during this period. Soil moisture in the District states ranges from adequate to short, and rain is especially needed for most of the fall-seeded small grains. With the exception of cotton, harvesting of fall crops is nearing completion. Prices received by Texas farmers and ranchers for all farm products during January-October averaged 6 percent above a year earlier. Cash receipts from farm marketings in the District states for the first 9 months of 1966 were 14 percent greater than in the comparable period last year. Receipts from livestock advanced 22 percent, and those from crops were up 4 percent. Nonagricultural wage and salary employment in the five southwestern states rose 0.7 percent during October to reach 5,446,100, as the number of workers in both manufacturing and nonmanufacturing activities advanced. The gain in nonmanufacturing employment was due entirely to a rise in government employment. The work force in mining and construction declined, while employment in other nonmanufacturing categories was little changed. As compared with October a year ago, total employment was 4 percent higher. Employment in manufacturing was 7 percent greater, and that in nonmanufacturing was almost 4 percent higher. In October the seasonally adjusted Texas industrial production index declined fraction- 16 New passenger car registrations in October in four major Texas markets moved to a neW high for the month and were 10 percent above a year ago. During the first 10 months of 1966, cumulative registrations for the four centers Dallas, Fort Worth, Houston, and San Antonio - were fractionally higher than in the same period in 1965. Department store sales in the Eleventh District for the 4 weeks ended November 19 were 2 percent above the corresponding 1965 period. Cumulative sales through November 19 thiS year were 6 percent more than a year ago. STATISTICAL StJPPLEMENT to the BUSINESS REVIEW December 1966 FEDERAL RESERVE BANK OF DALLAS - CONDITION STATISTICS OF WEEKLY REPORTING COMMERCIAL BANKS RESERVE POSITIONS OF MEMBER BANKS Eleven th Federal Reserve District Eleventh Federal Reserve District (Ave rag es of daily figures. In thou sand s of dollars) - (In thousands of dollarsl Item Nov.30, 1966 Oct. 26, 1966 Dec. I, 1965' ASSETS Ne t loans and discounts .... ... .. . . . ... .. .. " . . Valuation reserves . ... ... .. . ..... ... . ........ Gross loans and disco unts .. . . . . ..... ... ..... . . 5,027,374 89,583 5,116,957 5,040,566 91 ,33 1 5,131,897 4,787,900 7 9,899 4,867,799 Comm ercial and industrial loon s•. . . . ... . ... . . Ag ricultural 100ns2 •.. •.•• • ••• •. . . . ... . • . . . . 2,495,845 80,968 2,492,7 12 83,635 2,178,638 63,710 463 36,991 7 40,304 1 41 443 848 328,474 1,015 332,906 2,488 302,995 Real estat e loans ...... ... ...... ... . . .. .... Loans to dom estic comm erci al ban ks ., . . ..•... . loan s to foreign ban ks ... ... . .. . .... ... .. .. Consum er in stalm ent loans., ... .. .. . . .• .. .. .. loans to for eign governm ents, official institution s, etc .• • .• .... . .. . ...... . .. . . ... Oth er loans2•• • • • •••• ••• ••• • • , •• • •• •• • , • • • 151,235 254,892 468,729 171 ,299 5,265 617,794 154,798 259, 107 472,0 19 154,904 6,141 601,1 35} 131,135 296,226 441,938 164,905 3,710 0 504,154 533,214 Total inv estm ents . •... . .. . .. . ... . . . .... ... ... 2,255,061 2,208,165 2,203,645 Total U.S. Government se curities •.. . .......... 1,087,073 30,915 15,548 1,074,870 46,434 16,842 1,261,407 140,477 0 loans to broke rs and deale rs for pu rcha sing or carrying: U.S. Gove rnm e nt se curiti e s . . .... . . . . . .. .. . Othe r securiti es ..... . . . . .. . ... . . . . ... . .. Other loans for purchasin g or carrying: U.S. Gove rnm ent secu riti es ... .. . .... . . ... . Othe r securities ........ . ..... .. . .. ... . . . Loans to nonbank flnancial in stitution s: Sal es flnanc e, p ersonal finance, facto rs, and oth er busin ess credit companies.. , .... Other . • • • •••• • . ••... • •.. •• ..•• •••.. . . • Tre asury bill s. .. . .. • •.. . . . . • , • • • . •• .. . . . Tr ea sury ce rtiflcates of ind e bte dness .... . .. • Tre asury notes and U.S. bonds maturing I Within 1 ye ar •• .. . . . . • . ..• .. . .... . ... 1 ye ar to 5 y ears . . • ... ... . • . . . . , .•.. . o 12,194 958,297 960,886 Othe r a sse ts. , • . .• • • . •...• , . •. . . . . . . . . . .. .•• 86,714 110,783 813,255 546,669 75,306 504,690 4,233 334,869 89,672 67,996 810,271 59a.o29 77,197 464,622 4,426 320,750 833,706 520,528 64,941 462,893 4,262 317,782 TOTAL ASSETS •••••.•..••..• •• .•....... 9,561 ,457 9,524,026 9,195,657 All other ••• •••••• •• • ••• • •• • •• • • ••••• ••• Other bond s, corporat e stocks, and securities: Pa rticipation certificates in Fe deral ag ency 10ansJ ••••••••• • ••••• ••• • •••• • All other (including corporate stocksl ••.. • • • • Co sh it ems in process of coll ection • • . , ...•.. ... . Rese rves with Fed eral Reser ve Bank •• ••.. . , ..... Cu rre ncy and coin ...... . .. . . ... .. . . .... .. ... Ba lanc es with bonks in th e Unite d States . .. . .. . .. Balances with banks in foreign countri es , •• , ... . . Oct. 5, 1966 625,63 2 5BO,354 45,278 620,349 5,283 89,157 - 83,874 629,344 583,151 46,193 62 3,112 6,23 2 68,587 - 62,355 609,454 565,2 87 44,167 605,24 3 4,211 21,096 - 16,885 640,682 489,002 151,680 604,836 35,846 10,072 25,774 631,402 477,642 153,760 596,330 35,072 15,896 19,176 601,152 457,383 143,769 565,268 35,884 8,680 27,204 1,266,3 14 1,069,356 196,958 1,225,185 41,129 99,229 -58,100 1,260,746 1,060,793 199,953 1,219,44 2 41,304 84,483 -43, 179 1,210,606 1,022,670 187,936 1,170,511 40,095 29,776 10,319 RESERVE CITY BANKS Total rese rves held .. . ....... .. With Fed eral Rese rve Bonk . . .. Currency and coin .. . .. . ... . . Require d reserves .. . . . ........ Excoss reserves .. . ... . . . ... . .. Borrowing s• ... ... . .. .. ... .... Free reserves. .. . ..... .. ... ... COUNTRY BANKS Total rese rv es held .... . .. . .• . . With Fed eral Reserve Bonk .. .. Currency ond coin .. . . . ...... Require d reserves .. .. .. . .. . .. . Excess rese rves .•. ... .... .. ... Borrowing s. ... . .. .... .. .. . . . . Free rese rves.. ... . . .. ... .. . .. ""'} Totol rese rves held .•... . . . .. .. With Fed era l Rese rve Bonk .. .. Currency and coin ... . .... . . . Require d reserv es . . ..... . . . . .. Excess rese rves . ... .... . . .... . Borrowings .. . •. . . .. . .. . .. ... . Free rese rves. . . ...... . ... . . . . GR OSS DEMAND AND TIME DEPOSITS OF MEMBER BANKS Ele ven t h Fed e ral Re serve District (Ave rag es of dail y figures. I n million s of dollarsl 176,629 603,563 340,738 942,238 Total Reserve city bonks Country Date banks Total Rese rve city bonks Country banks 1964: Octobe r • • • 1965: October • •• 1966: May • • .. .• 8,582 8,8 14 B,669 8,742 8,91 2 8,637 8,797 8,847 4,098 4,145 4,019 4,080 4,165 3,982 4,080 4,064 4,484 4,669 4,650 4,662 4,747 4,655 4,71 7 4,783 4,627 5,402 5,795 5,704 5,734 5,764 5,736 5,726 2,274 2,636 2,743 2,667 2,660 2,670 2,634 2,595 2,353 2,766 3,052 3,037 3,07 4 3,094 3,102 3,131 Jun e ... . .. July ••• •. . . August ... . Sept emb er. October •.• CONDITI ON STATISTICS OF ALL MEMBER BANKS Total d e posits • •. . . . ...... . .• • ... •.• •• ..... . 8,1 55,425 8,063,182 B,016,230 Eleventh Federal Re serve District Total d emand deposits .. , . .... . .•.. . ... . . .. Individuals, partn ers hips, and corporations•.. . States and political subdivi sions . . . • .....• •. U.S. Governm ent • ........•.. . .. ... . , ... . 5,003,044 3,379,385 362,654 66,091 1,112,732 4,906,839 3,456,504 267,B24 83,469 1,020,790 4,942,016 3,257,676 337,250 150,421 1,096,822 (In millions of dolla rs l 4,329 19,729 58,124 3,152,381 2,830 18,67 2 56,750 3,156,343 3,654 18,568 77,625 3.074,214 1,1 76,584 1,375,501 575,335 8,825 13,796 1,1 75,787 1,384,869 570,616 8,849 13,BB2 1,348,384 ' 1,281,265 428,796 3,519 9,410 800 1,540 800 1,540 1,300 1,540 346,043 207,873 426,316 184,466 193,472 182,958 Gove rnm ents, offlcial in stitutions, etc ..... .. Comm e rcial bonk s• ... .. .... • .. ..• .•. . . Certifi ed and offlcers' ch ecks, etc ... . .. . . •.. Total tim e and saving s d e posits, • .••.• • , .... . Individual s, partn erships, and corporations: Saving s d e posits. , • ... ... ...••• •. ..... Oth er tim e d eposits• • . . . .. . ••• . •. , . . . . . States and po litical subdivi sions . .... . . ... . . U.S. Governm ent (including postal saving s) .. • Banks in th e United States .. . .. . ...... .. '" For eign: Governm ents, official institutions, etc ... . ... Comm ercial bank s, .. .. .. ...... ... .. . .. Bill s pa y abl e, rediscounts, and oth er liabiliti es for borrow e d money . ..... . ..... . .. Other liabilities .••. • • .• • . • . •• .•• •.• • ••• . ••• . CAPITAL ACCOUNTS • • •. ••. . • . . . • . ..••.• . .•. 852,116 850,062 802,997 TOTAL LIABILITIES AND CAPITAL ACCOUNTS 9,561 ,457 9,524,026 9,195,657 1 Be cau se of format ond coverag e revi sion s a s of July 6, 1966, earli e r data are not full y comparabl e . Ce rt ificates of partici pation in Federal ag ency loan s include Commodity Credit Corporation ce rtificates of inte res t previou sly included in "Agricu ltural loan s" and Export - I mport Bank parti ci pation s previou sly included in " Oth e r loons . " a Amount includes depo sits accumulated for paym ent of in stalm ent loon s; a s a res ult of a chan ge in Fede ral Reserve regulation s, e ffect ive June 9, 1966, such deposits are no long er report ed . 2 2 = TIME DEPOSITS GROSS DEMAND DEPOSITS LIABILITIES Banks In th e United States ••• • •• • ..• •••• . • • Forei gn: Nov. 3, 196:"'- ' 1,240,610 145,250 569,011 297,333 Obligation s of states and political subdivisions: Tax warrants and short-term notes and bills ... 4 w ee ks end ed Nov. 2, 1966 ALL MEMBER BANKS 164,978 609,504 266,128 Afte r 5 ye a rs • • • •••• • ••••••••• •• ••••• • 4 wee ks end ed 4 w ee ks ended Item Oct. 26, 1966 Item = - Oct, 27, 1965 Se pt. 28, 1966 ASSETS l oons and discountsl . .. . . . . . . , . • . . . . . . .. U.S. Governm ent obligation s• •. . ... ... . • . . Other securiti es l • •. . .. . . .. . •. , .. . . . . .. .. Rese rves with Fe deral Reserve Bank ... . . ... Ca sh in vault .... .... .. • .... ..... .. . . .. Ba lances with bonks in the Unite d States • . .. Balanc es with banks in foreign countriese .. . . Co sh it ems in proc ess of coll ection . •.• .. .. . Oth er asse tso . • .... .. .... . ... . ... . ... . . 8,623 2,273 2,224 1,001 225 1,055 7 906 498 ' 8,647 2,233 2,201 937 227 1,028 6 867 483 TOTAL ASSETse •.• •• • • ... • .. • • • •.... 16,812 16,629 Demond d e posits of bonks • .... ... ... ... . Oth er demand d eposits. .. . . .. . .. .. ..... . Tim e deposits••. , . ... .•...... .. . . .. . . . . 1,270 7,600 5,792 1,223 7,492 5,792 Total d eposit s . . . .. . .•. .•. . . . .. ... •.. Borrowing s. . .. .. ....... . ....•.. . .. . . .. Other liobililiese . . ... ... . . •..... . .. . ... Total copital accoun ts c ..... . .. ... . ...... 14,662 436 251 1,463 14,507 412 257 1,453 TOTAL LIA81L1T1ES AND CAPITAL ACCOUNTSe . .. . .. .. . ... . .. . .. ... . 16,81 2 16,629 8,210 2,45 1 1,85 4 872 211 1,10~ 840 452 Jl,.99L =-- LIA81L1TIES AND CAPITAL ACCOUNTS 1,31 2 7,442 5,432 - 14,186 200 22 2 1,389 ~ ----------------------------------------------------~ --! Beginning June 15, 1966 , Commodity Credit Corporation ce rtificates of interest and Export - I mport Sank participation s are . 'loan s and discounts. " e- Estimated. included in " Oth er se curiti es, ' I roth er thU n BANK DEB ITS, END-Of-M ONTH DEPOSITS, AND DEPOSIT TURNOVER (Dollar amounts in thou sands, seasona ll y adjuste d) DEBITS TO DEMAND DEPOSIT ACCOUNTS' DEMAND DEPOSITS' Percent change Octob er 1966 (Annuol-rate basis) Standard metropolitan statistica l area $ ARIZONA, Tucson _••. . .•.•...•.•••••.•.•••...•.•.••• LO UISIANA, Monroe • • •• .•• •••....••• .•• ••••...•. . .• Shreveport _•. .••••.•••••...••••••.. . .•.• NEW MEXICO, Roswell ' .•.. ....••••.......• . ••• .•• •. TEXAS, Abilene ••••..•• • ••.•.. ••••.....••. • •.•••••.. Amarillo . ... . ••.••............. ... . . ........ Austin . ..... .. ............................. . Beaumont-Port Arthur •••• .• ••... • •..•.• .• • • •• • Brownsville- Harlingen-San Benito ...•.. . ..•.•...• Corpus Christl' • •• ••..••••.....•••••••••• • .•• . Corsicana :! ••. • • • ..•• • •.•..•••••..•••.....• • • Dalla s ••••..•• •• •.•••• ..• .. . •.••••••••.•.•. . EI Paso • •.•• • •••. ••••••••• .. • •••••• • ••••• • . • Fort Worth •••.••••• . • • ••• • ..•.•• •• •••• ..•••• Golveston-Texas City • ••.••••••... .. • . • . ••• ••• Houston3 • ••••••••••••••••••••••••••••• • •••• . lore do ...................... . ..... .. ....... Lubbock •.•••••••... •• ... .•.•••.... • . ..••... Midland • .•• .. .•• •••••••.. • ••••......• •• . •.. Od essa • •••••••• . •• • • • •.• • •. . •••.•• .• • • • •• .. San Angelo • • •.•• •• ..• •• ••• • .... ••• ••••• •••• Son Antonio ..•... ... ... . .......... . .... , . . .. Texarkona (Texas-Arka nsas) • • •••• • •••• •. •.. . ••• Tyler •• •• • • .•••••••••••••••••••••••••••••••• Waco ... ............ .... .. ... ........ . ... . . Wichita Falls ••••• . ••• • ••••.••• • • ••••••••••• • Total_26 centers •• • ••• • . •.• •••• ••..••••• • •••••••••• Annual rato of turnov ~r Octob er 1966 from September 1966 4,336,944 I,B34, I64 5,334,144 592,9BO 1,925,112 3,935,772 4,201,164 5,400,612 1,529,052 3,984,348 326,064 69,098,364 4,575,660 14,585,988 1,852,332 62,263,776 596,604 3,336,660 1,564,224 1,263,636 837,360 11,775,072 1,000,800 1,550,388 2,486,916 1,965,900 3 -3 -4 -5 -2 -10 0 1 12 0 14 4 -9 0 -14 0 0 -11 -2 2 0 0 -3 1 28 -3 $2 12, 154,036 Octob er 1965 10 months, 1966 from 1965 7 2 10 - 11 9 0 6 5 12 9 -6 19 -1 16 -3 12 21 2 5 12 3 3 6 5 26 -1 2 9 11 4 9 9 8 12 9 8 11 17 2 11 2 13 12 7 -5 14 10 11 5 7 12 9 12 13 Octob er 31, 1966 Octob er 1966 $ 172,195 71,354 220,162 33,320 90,137 138,716 186,536 208,784 59,841 185,762 29,728 1,698,603 205,362 493,447 87,78 1 1,940,9 14 31,686 151,839 117,793 63,518 57,823 506,664 54,231 82,158 107,214 110,547 $7, 106,1 15 September 1966 Octob.r 1965r 24.9 25.6 24.7 17.6 21.6 28.5 22.7 25.5 26.0 21.5 11.2 41.3 23.3 29.4 20.9 32.3 18.9 21.9 13.4 19.6 14.9 23.6 18.5 18.9 23.3 18.0 24.9 25.4 26.0 18.4 21.8 31.B 22.5 25.2 24.7 21.6 10.0 40.5 25.7 29.5 23.9 32.2 19.8 23.9 13.8 18.8 15.3 23.8 19.1 18.8 18.5 18.6 24.7 23.5 24.1 18.9 20.1 27.9 22.1 25.2 24.7 20.7 12.1 36.1 22.9 25.7 21. 1 29.0 18.1 22.4 13.3 17.9 14.7 24.0 19.1 18.6 18.8 17.4 30.1 30.0 27.5 Deposits of individua ls partnerships and corporations and of states and politica l subdivisions . ~ Coun ty basis. ' a Revised (1 965) SMSA bo undari.s. r Revised . 1 I MAR KETED PR ODU CTI ON Of NATURAL GAS CONDITION Of THE fE DERAL RESERVE BANK Of DALLAS (In tho usands of dollors) Seasonally adjusted index (1957-59= 100) In millions of cubic feet Oct. 26, 1966 Nov. 30, 1966 Item botal go ld certificate reserves ... . ..... .. . . . . O'scounts for memb er banks ... .......... . . . Uth er discounts and advances ............. . T.5. Government securities ................ . ta l earning a ssets . . . .... .. ........ .. ... . F ember bank reserve deposits . ..... .. . ... . . ederal Reserve notes in actual circu lation •. .. . M 38 1,754 106,800 870 1,663,5 14 1,771, 184 1,001,447 1,239,004 345,008 81,202 754 1,677, 176 1,759,132 966,078 1,254,173 Dec. 1, 1965 334,779 1,846 1,9 14 1,656,698 1,660,458 917,604 1,1 67,284 Area Second quarter 1966 first quarter 1966 Second quarter 1965 Second quarter 1966 first quarter 1966 Second quarter 1965 louisiana ....... New Mexico . . ... Oklahoma • ••. . • Texas ..... . .... 1,178,700 244,600 274,600 1,684,700 1,301,BOO 264,900 322,700 1,839,500 1,053,600 230,000 300,500 1,64 1,900 234 143 160 129 209 134 175 129 210 134 175 126 Total .• •..• • •• 3,382,600 3,728,900 3,226,000 158 153 150 SO URCES , U.S. Bureau of Mines. Federal Reserve 80nk of Dollas . INDUSTRIAL PRODU CT ION (Seasonally adiusted indexes, 1957-59 DA ILY AVERAGE PRODUCT ION Of CRUDE OIL = 100) (In thou , ands of borrels) ~ - Area and type of index TeXAS (1 966 revision)! Tota l Industrial producti on. ... .. Manufacturing .. . . ... .. .. . ..... October 1966p September 1966 August 1966r October 1965 ~;Wt~:;. :::::::::::::::::::::: 147.7 165.1 180.5 154.9 116.9 175. 1 148.6 165.6 178.0 157.4 11 6.7 185.8 145.9 162.5 175.3 153.9 114.9 181.7 136.6 151.5 162.1 144.5 108.7 16B.7 Utl7i't~:S·. ::::::::::::::::::::: : 158.6 160.8 168.4 151.3 121.7 179.0 158.1 160.3 167.4 151.4 121.3 179.0 158.2 160.3 167.2 151.2 122.0 178.6 145.5r 147.0r 150.8r 142.3r 116.4r 164.7r Durable • •••.... ••••••••• ..• . Nondurable . . .. .........• . . .. UN ITED STATES M Total industria l production •••... anufacturing . ... ... . . . ... .. .. Durablo ...... . . . ....... ..... MIN.°ndurab/o • •• • •• • • ••••••••.• ---~----------------------------------------------~1 Comparab le bock PPrelimi nary. da ta are oval lable from th e Research Depa rt ment of this Bank. Revised. SOURCES, 800rd of Governo rs of the Federa l Reserve System. Federal Reserve 8ank of Da llas. r- Percent change from Area October 1966p September 1966p October 1965 elEVENTH DiSTRiCT ••••••.• Texas .... . . ........ . . . . Gulf Coast •. ••• • .••••• West Texas . .... . ..... East Texos (p ro per) ••• • • Pan hand le • •. . ••••. • .• Rest of State • • ••• • .••• Southeastern New Mexico .. Northern Louisiana . . •... . . O UTSIDE ELEVENTH DISTRICT UNITED STATES ••• • • •• ••••• 3,445.0 2,965.7 552.5 1,355.3 125.3 96.4 836.2 307.0 172.3 4,930.5 8,375.5 3,413.2 2,940.6 539.0 1,335.8 123 .1 99.6 843.1 300.5 172.1 4,8B6.5 8,299.7 3,225.8 2,779.5 525.1 1,282.2 11 2.5 96.2 763.5 293.0 153.3 4,649.1 7,874 .9 September 1966 0.9 .9 2.5 1.5 1.8 -3.2 -.8 2.2 .1 .9 .9 Octob er 1965 6.8 6.7 5.2 5.7 11.4 .2 9.5 4.8 - 12.4 6.1 6.4 p Preliminary, SOURCES , American Petroleum Institute. U. S. Bureau of Mines. Federal Reserve Bank of Dallos. 3 NONAGR ICULTURAL EMPLOYM ENT VALUE OF CONSTRUCTION CONTRACTS .,," (In millions of do llars) January-October October 1966 Area and type FIVE SOUTHWESTERN STATES' ............... . Residential building . .. . ..• Nonresi d ential building .... Nonbuilding construction ... UNITED STATES ............ Residential building ••••••. Nonresidential building ... . Nonbuilding construction • •. September 1966 Octob er 1965 1966 Five Sou thwester n States ' .' 11 1965 Type of employm ent 522 119 147 255 4,083 1,261 1,676 1,146 586 128 216 242 4,106 1,225 1,796 1,086 414 169 140 105 4,356 1,897 1,582 877 4,576 1,625 1,474 1,478 43,652 15,856 16,733 11 ,064 4,436 1,783 1,506 1,147 41,986 18,193 14,5 14 9,279 Arizona, loui sia na, New Mexico, Oklahoma, and Texas. NOTE. - Details may not add to totals because of rounding, = Percent change Oct, 1966 from Number of persons September 1966p 1966 Octob er 1965r 5,446,100 995,300 4;450,800 232,000 358,200 5,408,300 991,100 4,420,000 236,500 360,000 5,226,100 931,400 4,294,700 233,600 36 1,700 0.7 .4 .7 - 1.7 -.5 4.2 6.9 3.6 -.4 _1.0 423,600 1,276,900 27 1,300 787,800 1,100,400 423,600 1,272,300 27 1,200 787,900 1,068,200 408, 100 1,2 29,500 26 1,600 759, 100 1,041,100 .0 .4 .0 .0 3.0 3.8 3.9 3.7 3.8 5.7 Total nonagricultural wage and sa lary work ers,. Ma nufacturing •. .••••.... Nonmanufacturing ••. . .•.• Mining .......... . .... Construction . .. .. . . .... Tran sportation and public utilities ••.. .. . . 1 Trade •..••......••..• SOURCE, F. W. Dodg e Company. Finance • •••••..•.•••.. Service •. . .•..... . . . . . Governm ent ...... .... . Oct. 1965 Sept. 1966 Octob er 1 Arizona , Loui si a na , N ew M exic o, O klahoma, and Texa s. p r - Preliminary. Revised. SOURCE , Sta te employmen t age ncies. COTTON PRO DUCTI O N Texas Cro p Rep o rt in g Districts (In thousands of bo les - 500 pounds gross weight) CA SH REC EIPTS FR O M FARM M ARKETINGS 1966, 1966 indicated as percent of Area Nov. 1 1965 1964 1965 High Plains .. . .... .. . High Plains •.••••• • •• Plains • ••• .••• ••• ~ •• Plains ••..• • .• . • . . •• 1O·N - South Texas Plains •• • •••• •• •• 10-S - Lower Rio Grande Valley •••••• 330 1,200 230 330 20 475 30 45 145 25 90 135 85 35 245 555 1,693 281 402 21 469 34 58 194 57 108 168 20 1 41 383 565 1,348 236 247 17 443 27 66 213 24 146 166 248 45 332 59 71 82 82 95 10 1 88 78 75 44 83 80 42 85 64 State •• • • • •• • ..••••• • ••.•••••.• 3,420 4,665 4,123 73 l- N l-S 2-N 2-S 3 4 - Northern Southern Red 8ed Red Bed Western Cross Timb ers • ...• '" Black and G ra nd Prairies.. •.. . 5·N - East Texas Timb ere d Plains •••• 5-5 - East Texas Timbered Plains ..•. 6 - Trans - Pecas • . .... . . • . . ..... . 7 - Edwards Plateau ........ . ... . B·N - South ern Texas Prairi es •. . •• .• 8-5 - South ern Te xa s Prairi es • . •• . .• 9 - Coa sta l Prairies............. . (Dolla r amounts in thousa nds ) ~ January-Septemo er 1965 Percent incre a se 324,085 250,734 129,682 519,069 1,590,333 7 10 13 13 16 $ 2,813,903 $25,908,111 14 12 1966 Are a Texas .•.•.•...•.•.......... 347,219 276,734 146,455 587,565 1,845,141 Total .... ........... . ..... United States •••••.•••.. ••• $ 3,203,114 $28,98 1,179 $ Arizona .•••.•.....•.••..... Louisiana . . .. .. . .. . . .. .. .. • • N ew M exico • • • •............. Okla homa •••• • • • • . • •• .•. .• • $ SOURCE, U.S. Department of Agriculture. SOURCE, U.S. Departme nt of Agricult ure. BUILDING PE RMITS VALUATIO N (Dollar amounts in thousands) CRO P PRODUCTION Perc ent cha nge (In tho usands of bushels ) Oct. 1966 NUMBER TEXAS 10 mos. 6, 126 $ 1,325 3,481 53 248 284 140 401 1,690 319 EI Pa so ....... 667 Fort Worth • • .• 73 G al veston ••• • . Houston ..• •.. 1,705 93 Lubbock •.. .• • 60 Midla nd ••••.. 66 O dess a .••.. . . 115 Port Arthur • • • • San Antonio ... 1, 186 Wa co • •... .. . 166 Wichita Fa lls .. 59 Total -19 cities • • 8,1 03 Area estima ted Average Nov. 1 1965 1960-64 Nov. 1 1965 1960-64 Cotton 2 • ••••••• • Corn •... . ••.• . . Winter wheat • . •• 3,420 19,872 66,825 22,148 2,508 496 21,672 329,450 720 3,169 399,000 4,440 1,105 23,000 4,665 19,371 72,630 21,975 2,698 377 21,7 14 285,740 940 3,065 299,250 2,921 1,280 62,000 4,480 27,935 62,436 21,503 6,292 354 15,838 230,073 955 2,363 225,323 2,637 1,1 12 31,600 4,830 28, 143 171,688 30,111 24,507 1,252 42,710 380,728 720 8,386 642,090 8,236 5,240 83,500 6,616 29,596 212,7 16 31,019 25,914 1,305 40,5 12 334,5 12 940 8,34 8 523,62 5 5,8 13 6,1 04 121,400 6,52 1 41, 196 164,459 32,623 31,074 1,135 30,991 267,01 1 955 7,008 404,683 5,633 4,769 88,510 Rice 3 • ••••••• • •• Sorgh um grain ... Flaxseed • •• •. . • Hoy· • •• . • ••• . .. Peanutss• ....... Irish potatoes 6 ... ' Sweet fotatoes 6.. Pecans . •• •. .•.. 1 Arizona, Loui si ana, N ew Mexico, Oklahoma , and Texa s. !! In thou sa nds of ba les . a In thousands of bag s contai ning 100 pounds each. 4. In thousands of tons. Ij I n thousands of pounds. o In tho usand s of hundredweight. SOURCE , U.S. Deportment of Agric ul ture . 4 10 monthS, 1966 from 1965 - Sept. 1966 Oct. 1965 21,465 - 1 23 1,922 24, 137 106 -63 23 677 3,895 3,146 1,652 3,787 19,049 4, 102 6,406 915 20,33 1 1,644 897 1,075 962 13,021 2,054 708 664 622 4,002 519 2,020 10,659 3,147 3,11 0 311 27,256 6,8 13 356 252 658 5,3 14 597 1,940 12,767 31,140 66,3 15 13,175 28,550 160,137 47,951 67,465 10,895 275,651 54,607 13,013 10,725 4,570 76,756 10,562 13,218 -72 -82 50 0 -25 -32 -13 -82 -62 61 48 -10 -58 157 - 13 - 73 -5 -83 -8 1 -2 1 -59 45 -21 - 13 -23 -49 1 139 -67 -65 - 13 7 11 190 - 17 4 20 - 17 32 _4 4 42 68 2 61 _4 -10 -2 1 24 -40 34 93,92 8 $71,487 $943,099 - 15 - 12 Oct. 1966 10 mos. 1966 481 297 1966 1966, .A:vera ge Crop Oats • • ..•••• •• • 8arley • • • • .• ••• Rye ... . .... ... . from Oct. 1966 FIVE SO UTH WESTERN STATES' 1966, estimated = AR IZO NA Tucson • • ••••.• LOUISIANA Shreveport . . . . TEXAS Abilene •••...• Amarillo ...... Austin . . ••••.. Bea umont . ...• Corpus Christi .. Da lla s.• • • • .. . - IfEDERAt. RESERVE BANK OF IDA IL LAS FEDERAL RESERVE BANK OF DALLAS To the Member Banks in the Eleventh Federal Reserve District: The Statement of Condition and the earnings and expenses of the Federal Reserve Bank of Dallas for the year 1966, with comparative figures for 1965, are shown herein. Lists of the directors and officers of the Bank and its branches as of January 1, 1967, are also included. A review of economic and financial developments in the Nation and the District during 1966 is being presented in the January 1967 Annual Report Issue of the Business Review of this Bank. Additional copies of these publications may be obtained upon request to the Research Department, Federal Reserve Bank of Dallas, 400 South Akard Street (mailing address: Station K, Dallas, Texas 75222). Sincerely yours, WATROUS President H. IRONS statement 01 condition Dec. 31, 1966 Dec. 31, 1965 ASSETS Gold certificate account .. ...... . .... ...... . .......... $ Redemption f.und for Federal Reserve notes 655,337,464 61,919,809 $ 367,907,289 56,691,801 Total gold certificate reserves .. ... . Federal Reserve notes of other Banks . Other cash. . . .. .. .. . ..... . . Discounts and advances . U.S. Government securities: Bills .. . . . .... . Certificates .... .. .. ... . Notes .... . . . ....... . Bonds 717,257,273 40,500,700 18,429,704 400,000 424,599,090 47,262,200 6,546,798 22,024,000 430,479,000 158,682,000 776,882,000 226,069,000 374,626,000 1,022,083,000 269 ,636,000 1,592,112,000 1,666,345,000 1,592,512,000 540,487,954 9,840,781 62,751,442 1,688,369,000 464,980,479 10,513,931 49,104,064 .... $2,981,779,854 $2,691,375,562 . $1,278,172,767 $1,193,940,804 1,064,648,587 137,218,136 9,280,000 7 ,047,303 1,034,443,622 21,204,504 8,700,000 5,970,581 1,218,194,026 410,832,102 8 ,152,959 1,070,318,707 355,703,182 7,476,769 2 ,915,351,854 2,627,439,462 33,214,000 33,214,000 31,968,050 31 ,968,050 Total U.S. Government securities . Total loans and securities ... . . . Cash items in process of collection ......... . Bank premises . . . . . .. . ........ . Other assets TOTAL ASSETS LIABILITIES Federal Reserve notes in actual circulation .... .... . Deposits: Member bank - reserve accounts . U.S. Treasurer - general account . Foreign .. . Other ....... . Total deposits Deferred availability cash items . Other liabilities .... TOTAL LIABILITIES CAPITAL ACCOUNTS Capital paid in . Surplus TOTAL CAPITAL ACCOUNTS .. TOTAL LIABILITIES AND CAPITAL ACCOUNTS . 66,428,000 63,936,100 . .... $2,981,779,854 $2,691,375,562 earnings and expenses 1966 1965 CURRENT EARNINGS Discounts and advances .... . . . . ....... . $ 2,184,633 $ 1,062,969 71,722,638 62,144,870 1,275,220 809,956 35,484 31,407 64,049,202 U.S. Government securities .. . Foreign currencies .... . . . . All other .... TOTAL CURRENT EARNINGS ..... . . ... .. . .. .. . . .. .. . . . 75,217,975 CURRENT EXPENSES Current operating expenses .. Assessment for expenses of Board of Governors ............ . 10,437,270 9,991,494 524,400 501,096 863,240 1,153,992 Federal Reserve currency: Original cost, including shipping charges . Cost of redemption, including shipping charges ......... . 66,555 48,538 . ..... . ....... . ....... . ... . 11,891,465 11,695,120 Less reimbursement for certain fiscal agency and other expenses . . ......... ... ..... . .. . 848,953 840,387 ... . ........... . ... .. .. ... ... . . . 11,042,512 10,854,733 Total . . . . . . . . . . . . . . . NET EXPENSES ----- PROFIT AND LOSS Current net earnings . . . .. . . . . Additions to current net earnings ... 64,175,463 53,194,469 76,588 71,537 Deductions from current net earnings: 95,832 329 7,24 1 49,113 Total deductions .. , 103,073 49,442 Net additions or deductions (-) . -26,485 22,095 Net earnings before dividends and payments to U.S. Treasury ....... . . . .... . 64,148,978 53,216,564 Dividends paid ... '. . .... ............. . 1,965,116 1,891,621 60,937,912 49,942,543 Transferred to surplus ........ . ............. . .... . ..... . . 1,245,950 Surplus, January 1 ....... . . , . . . .... 31,968,050 Surplus, December 31 .. . . .. .. . . .. .............. . .. $33,214,000 1,382,400 Loss on sales of U.S. Government securities (net) . All other ........ . ...... . Payments to U.S. Treasury (interest on F.R. notes) .. 30,585,650 $31,968,050
@FedFRASER